The Portfolio Expected Return of Two Investments

question 148

Multiple Choice

The portfolio expected return of two investments

• A)will be higher when the covariance is zero.
• B)will be higher when the covariance is negative.
• C)will be higher when the covariance is positive.
• D)does not depend on the covariance.

---

Definitions:

Total Opportunity Cost

The overall cost of choosing one investment or action over another, considering both tangible and intangible benefits.

Optimal Amount

The most efficient, beneficial, or functional level or quantity of a resource, input, or action for achieving a desired outcome.

Carrying Costs

Expenses associated with holding inventory, including storage, insurance, and taxes.

Credit Cost Curve

A graphical representation showing the relationship between the cost of credit (interest rates) and the amount of credit available in the market.