True or False: A portfolio combining two assets with less than perfectly positive correlation can reduce total risk to a...
True or False: A portfolio combining two assets with less than perfectly positive correlation can reduce total risk to a level below that of either of the components.
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A portfolio combining two assets with less than perfectly positive correlation can reduce total risk to a level below that of either of the components.
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True or False: A portfolio combining two assets with less than perfectly positive correlation can reduce total risk to a...
Investors can reduce risk by holding more than one asset in a portfolio. True or false?
Investors can reduce risk by holding more than one asset in a portfolio. True or false?
Which of the following statements is (are) false regarding the risk of a portfolio of two...
Which of the following statements is (are) false regarding the risk of a portfolio of two risky securities A & B? A. The co-variance of A&B equals the volatility A plus volatility B plus the correlation between A&B B. If the correlation between A & B is -1, a risk free portfolio comprising A &B can be constructed that would have an expected return equal to the risk free rate C. The risk of a portfolio comprising A & B...
Which of the following statements is FALSE regarding the risk of a portfolio comprised of two...
Which of the following statements is FALSE regarding the risk of a portfolio comprised of two risky securities A & B? a) If the correlation between A & B is +1, the risk of the portfolio comprising A &B is simply the weighted average of the volatilities of A & B. b) The risk of a portfolio comprising A & B can be less than the risk of either A or B c) If the correlation between A & B...
Portfolio with combinations of assets with low or negative correlation tend to display lower volatility than...
Portfolio with combinations of assets with low or negative correlation tend to display lower volatility than the individual assets or portfolios of assets with positive correlation? True or False and why?
How to construct a risk-free portfolio using two assets? Find two assets with correlation between them...
How to construct a risk-free portfolio using two assets? Find two assets with correlation between them equal to -1 Find two assets with correlation between them equal to 1 Find two assets with correlation between them bigger than 0 but smaller than 1 Find two assets with correlation between them bigger than -1 but smaller than 0 Stock A and B are identical in terms of their expected cash flows. Investors like stock A more than stock B today for...
PLEASE EXPLAIN WHY ANSWER IS TRUE OR FALSE: "Risk aversion" implies that investors require higher expected...
PLEASE EXPLAIN WHY ANSWER IS TRUE OR FALSE: "Risk aversion" implies that investors require higher expected returns on riskier than on less risky securities. a. True b. False When adding a randomly chosen new stock to an existing portfolio, the higher (or more positive) the degree of correlation between the new stock and stocks already in the portfolio, the less the additional stock will reduce the portfolio's risk. a. True b. False An individual stock's diversifiable risk, which is measured...
True or False: In no case will creating portfolios of assets result in greater risk than...
True or False: In no case will creating portfolios of assets result in greater risk than that of the riskiest asset included in the portfolio.
Correlation, risk, and return Matt Peters wishes to evaluate the risk and return behaviors associated with...
Correlation, risk, and return Matt Peters wishes to evaluate the risk and return behaviors associated with various combinations of assets V and W under three assumed degrees of correlation: perfectly positive, uncorrelated, and perfectly negative. The expected return and risk values calculated for each of the assets are shown in the following table, B a. If the returns of assets V and W are perfectly positively correlated correlation coefficient = +1), describe the range of (1) expected return and (2)...
Other things equal, when adding new securities to a portfolio, the lower (less positive) the correlation...
Other things equal, when adding new securities to a portfolio, the lower (less positive) the correlation between the new securities and those already in the portfolio, the less the additional portfolio diversification. True False Question 7 (4 points) Consider the following portfolio: Stock Investment Expected Return А $400000 16% B $200000 12% C $800000 18% $300000 16% The expected rate of return for the portfolio is: Your Answer:
1. Perfectly ________ correlated series move exactly together and have a correlation coefficient of ________, while perf...
1. Perfectly ________ correlated series move exactly together and have a correlation coefficient of ________, while perfectly ________ correlated series move exactly in opposite directions and have a correlation coefficient of ________. A. negatively; -1; positively; +1 B. negatively; +1; positively; -1 C. positively; -1; negatively; +1 D. positively; +1; negatively; -1 2. If two assets having perfectly negatively correlated returns are combined in a portfolio, then some combination of those two assets will ________. A. have more risk than...
Which of the following statements is (are) false regarding the risk of a portfolio of two risky securities A & B? A. The co-variance of A&B equals the volatility A plus volatility B plus the correlation between A&B B. If the correlation between A & B is -1, a risk free portfolio comprising A &B can be constructed that would have an expected return equal to the risk free rate C. The risk of a portfolio comprising A & B...
Correlation, risk, and return Matt Peters wishes to evaluate the risk and return behaviors associated with various combinations of assets V and W under three assumed degrees of correlation: perfectly positive, uncorrelated, and perfectly negative. The expected return and risk values calculated for each of the assets are shown in the following table, B a. If the returns of assets V and W are perfectly positively correlated correlation coefficient = +1), describe the range of (1) expected return and (2)...
Other things equal, when adding new securities to a portfolio, the lower (less positive) the correlation between the new securities and those already in the portfolio, the less the additional portfolio diversification. True False Question 7 (4 points) Consider the following portfolio: Stock Investment Expected Return А $400000 16% B $200000 12% C $800000 18% $300000 16% The expected rate of return for the portfolio is: Your Answer:
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