An investor is considering selling his Rumbidzo bank shares and acquiring NeNyasha bank shares instead. His son commented that it does not matter whether you keep the Rumbidzo bank shares or replace it with NeNyasha bank shares. 

Select the most valid response to his son's comment. 

1. Correct but only under the assumption that these shares have the same expected return.

2. Correct but only under the assumption these shares have the same standard deviation. 

3. Wrong, it depends on the correlation between the portfolio and each share.

4. Wrong, in all depends on the expected performance of each share.

Answer rating: 100% (QA)

The detailed answer for the above question is provided below The most valid response to his sons comment is Correct but only under the assumption that ... View the full answer