$1.$ Assume you are constructing a two$-$asset portfolio. Under which condition will the portfolio achieve the maximum risk reduction?

Question $2$Answer

a$.$

When the correlation coefficient is zero.

b$.$

When the correlation coefficient between the assets is $+1.$

c$.$

When the correlation coefficient is $-1.$

d$.$

When both assets have equal expected returns.

e$.$

When both assets have the same standard deviation.