The Global Minimum Variance Portfolio Formed from Two Risky Securities

question 12

Multiple Choice

The global minimum variance portfolio formed from two risky securities will be riskless when the correlation coefficient between the two securities is

• A)0.0.
• B)1.0.
• C)0.5.
• D)-1.0.

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Definitions:

Altruistic Behavior

Action taken to benefit others without expecting personal gains, driven by selfless concern for the well-being of others.

Reciprocity Norms

Social norms that dictate that we should treat others as they treat us, leading to mutual benefit or support.

Reciprocity Norm

A social expectation that people will respond to each other in kind, returning benefits for benefits and responding to harms with either retaliation or forgiveness.

Social-Responsibility Norm

An expectation that people will help those dependent upon them.