You wish to diversify your single minus ?security portfolio in a way that will maximize your reduction
Fantastic news! We've Found the answer you've been seeking!
Question:
You wish to diversify your single minus ?security portfolio in a way that will maximize your reduction in risk. Which of the following securities should you add to your? portfolio?
A. Treasury bills that have a correlation coefficient of 0.0 with your current security
B. Alpha Company stock that has a correlation coefficient of minus ?0.25 with your current security Your answer is correct.
C. Delta Company bonds that have a correlation coefficient of 0.36 with your current security
D. Beta Company stock that has a correlation coefficient of 0.50 with your current security
Why did we pick B?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date: