For a Two-Stock Portfolio, What Would Be the Preferred Correlation

question 70

Multiple Choice

For a two-stock portfolio, what would be the preferred correlation coefficient between the two stocks?

• A) +1.00
• B) +0.50
• C) 0.00
• D) −1.00
• E) None of the options are correct.

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Definitions:

Core Countries

Nations that dominate global trade and economics, characterized by high levels of industrialization and a well-developed infrastructure.

Global Stratification

The hierarchical arrangement and classification of societies or countries based on indicators such as wealth, economic status, access to resources, and power.

Fertility Rates

The average number of children that would be born to a woman over her lifetime, based on current age-specific fertility rates.

Societal Burden

A term that describes the overall impact of social problems, including economic costs and negative effects on well-being, on a community or society.