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:

Integrative Approach

A holistic method that combines elements from different theories or practices to address complex issues or problems.

Asymmetric Conflict

A conflict where the parties involved possess unequal military resources or capabilities, often leading to non-traditional tactics to balance power differences.

Positive

Positive refers to characteristics, events, or outcomes that are beneficial, favorable, or desirable.

Negative Consequences

Undesirable outcomes that result from an action or decision, potentially acting as a deterrent for future similar actions.