Diversification is most effective when security returns are _________. A. negatively correlated B. uncorrelated C. positively...
Diversification is most effective when security returns are _________.
A. negatively correlated
B. uncorrelated
C. positively correlated
D. high
Please explain why
Homework Answers
Ans: A
If securities were perfectly negatively correlated, the weights for the minimum variance portfolio for those securities could be calculated, and the standard deviation of the resulting portfolio would be zero.
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Diversification is most effective when security returns are
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