In a Two-Security Minimum Variance Portfolio Where the Correlation Between

question 59

Multiple Choice

In a two-security minimum variance portfolio where the correlation between securities is greater than −1.0,

• A) the security with the higher standard deviation will be weighted more heavily.
• B) the security with the higher standard deviation will be weighted less heavily.
• C) the two securities will be equally weighted.
• D) the risk will be zero.
• E) the return will be zero.

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Definitions:

Pituitary Hormones

A group of hormones produced by the pituitary gland, which regulate various physiological processes including growth, reproduction, and metabolism.

Gonadotropic Hormones

Hormones produced by the pituitary gland that stimulate the activity of the gonads (ovaries and testes).

TSH

Thyroid-stimulating hormone, a pituitary hormone that regulates the production of hormones by the thyroid gland.

ACTH

Adrenocorticotropic hormone, a hormone produced in the pituitary gland that stimulates the adrenal cortex to release cortisol and other steroids.