Question: 1. No diversification benefits can be achieved by combining securities in a portfolio when the correlation between the securities is _____________. 1 less than 1

1. No diversification benefits can be achieved by combining securities in a portfolio when the correlation between the securities is _____________.

less than 1

between 0 and 1

less than or equal to 0

You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40%, respectively. X has an expected rate of return of 14%, and Y has an expected rate of return of 10%. The dollar values of your positions in X, Y, and Treasury bills would be _________, __________, and __________, respectively, if you decide to hold a complete portfolio that has an expected return of 8%.

		$595; $162; $243
		$243; $162; $595
		$306; $257; $437
		$570; $380; $50

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