The Correlation Coefficient Between the Efficient Portfolio and the Risk-Free

question 83

Multiple Choice

The correlation coefficient between the efficient portfolio and the risk-free asset is

• A)+1.0.
• B)−1.0.
• C)0.0.
• D)Further information is needed.

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Definitions:

Capital Account

The capital account records the exchanges of financial assets and liabilities between a country and the rest of the world, including direct investment and loans.

Current Account

A component of a country's balance of payments that includes transactions in goods, services, primary income, and secondary income flows between domestic and foreign entities.

Demand

The quantity of a good or service that consumers are willing and able to purchase at different prices.

British Pounds

The currency of the United Kingdom, symbolized as GBP, and commonly referred to as the pound sterling.