Question: 7. Given other parameters known, an effective diversification is determined by the weights on assets and the correlation coefficient between the two asset return series.

7. Given other parameters known, an effective diversification is determined by the weights on assets and the correlation coefficient between the two asset return series. Diversification is most effective when asset returns are

A) High

B) Negatively correlated

C) positively correlated

D) Uncorrelated

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