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    Exam 5: Understanding Risk
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    If the Returns of Two Assets Are Perfectly Positively Correlated
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If the Returns of Two Assets Are Perfectly Positively Correlated

Question 1

Question 1

Multiple Choice

If the returns of two assets are perfectly positively correlated, an investor who puts half of his/her savings into each will:


A) Reduce risk
B) Have a higher expected return
C) Not gain from diversification
D) Reduce risk but lower the expected return

Correct Answer:

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