Which Two of the Statements Are Correct

question 31

Multiple Choice

Which two of the statements are correct?

• A) For perfectly positive correlated investments portfolio standard deviation is equal to the weighted average of the standard deviation of the constituent investment.
• B) For perfectly negatively correlated investments portfolio standard deviation is equal to the weighted average of the standard deviation of the constituent investment.
• C) Portfolio standard deviation is usually greater than the weighted average of the standard deviation of the constituent investments.
• D) Portfolio standard deviation is usually less than the weighted average of the standard deviation of the constituent investments.

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Definitions:

Income Elasticity

A measure of how much the demand for a good or service changes with a change in consumers' income, indicating the nature of the good as either a necessity or a luxury.

Hybrid Cars

Vehicles powered by a combination of an internal combustion engine and one or more electric motors, using less fuel than conventional cars.

Normal Good

A type of good for which demand increases as the income of the consumer increases, showing a direct relationship between income and demand.

Income Elasticity

A measure of how much the demand for a good responds to a change in consumers' income.