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
_________.
A. negatively correlated
B. uncorrelated
C. positively...
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Question 9 Other things equal, diversification is most effective when Securities' returns are positively correlated. Securities'...
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33. Consider two perfectly negatively correlated risky securities, A and B. Security A has an expected...
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Consider two perfectly negatively correlated risky securities, A and B. Security A has an expected rate...
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1. Perfectly ________ correlated series move exactly together and have a correlation coefficient of ________, while perf...
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In a portfolio that contains two assets it is possible that there is no benefit to...
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3. (2 points) Diversification is most effective when security returns are_ a high b. negatively correlated positively correlated d uncorrelated Asset Pricing (18 points) 4. (3 points) Suppose the CAPM holds and you have the following information on different assets Asset Systematie Risk Firm-specific Risk A 0.12 0.11 0.11 0.10 0.14 0.17 Which one of the following is true? a. Asset A has the largest beta b. Asset B has the largest beta
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33. Consider two perfectly negatively correlated risky securities, A and B. Security A has an expected rate of return of 16% and a standard deviation of return of 20% Bhas an expected rate of return of 10% and a standard deviation of return of 30% The weight of security B in the minimum-variance portfolio is A 10% B 20% C 40% D. 60%
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