Homework Answers
- The correlation between the returns of A and B is -1 so if the
return in A has increased by
- then the return in B will fall by 25%.
- If the original return is 10% then the fall will be of 0.25 x 10 = 2.5%
- So the new return for B = 10-2.5 = 7.5%
- So B is the correct option
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