Question: When two assets have +1 correlation... a - The assets covariance can be positive or negative. b - The Minimum Variance Portfolios standard deviation is

When two assets have +1 correlation...

a - The assets covariance can be positive or negative.

b - The Minimum Variance Portfolios standard deviation is zero.

c- The investment opportunity set is shaped as a "sideways V".

d- The standard deviation of the risky portfolio is the weighted average of the standard deviations of the assets.

which is correct?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

When two assets have + 1 correlation... The Minimum Variance Portfolio s standard deviation is zero. The investment opportunity set is shaped as a "sideways V " . The standard deviation of the risky...

Q:

A stock has a variance of 1000bpts. It's beta is 0.8 and the market's variance is 600bpts. The firm's firm specific risk (variance) in basis points is 520 877 384 616 Variance... is negative when two...

Q:

Hello attached please find tasks that I would like to get help on by 8 pm tonight. Thank you Principles of Investment (FIN 351) Learning Exercise 4 DIVERSIFICATION N. Gershun 1. Assume that an...

Q:

When two assets have -1 correlation... The investment opportunity set is the line connecting the two assets. Knowing that one asset's return is above its expected return tells you nothing about the...

Q:

When two assets have +1 correlation... The investment opportunity set is the line connecting the two assets. The assets covariance can be positive or negative. Knowing that one assets return is above...

Q:

Canfly Airlines is considering two mutually exclusive projects, Project A and Project B. The projects have the following cash flows (in millions of dollars): Year Project A Cash Flow Project B Cash...

Q:

26 of 30 Unsure Which of the following statements is CORRECT? I. Corporations are subject to corporate income tax while partnerships are subject to partnership income tax. II. Proprietorships are...

Q:

Which of the following statements is true about diversification? O a. There is no benefit from diversification if the correlation coefficient is 1 Ob. The variance is the weighted average of the...

Q:

Which of the following statements is true about diversification? The benefit from diversification is maximized if the correlation coefficient is zero If the covariance between two securities is...

Q:

Which of the following statements is true about diversification? O a. There is no benefit from diversification if the correlation coefficient is 1 O b. The benefit from diversification is maximized...

Q:

An electromagnetic wave emitted by an elementary dipole propagates in vacuum so that in the far field zone the mean value of the energy flow density is equal to so at the point removed from the...

Q:

Troy Craft discovered a piece of wet and partially burned balance sheet after his office wasdestroyed by fire. He could recall a current ratio of 1.75 and a debt to assets ratio of 45percent. Assets...

Q:

Analytical procedures are mandatory during which phases of the audit? tests of controls and tests of details tests of details and final evaluation planning and risk response planning and tests of...

Q:

Discuss the policy statement concept and identify three focus areas / procedures where a clearpolicy statement / operating procedure

Q:

Understand the importance of recruitment and selection in the formation of the employment relationship

Q:

Can negative outcomes associated with redundancy be avoided?

Q:

Understand the key features of recruitment and selection policies