When Two Risky Securities That Are Positively Correlated but Not

question 72

Multiple Choice

When two risky securities that are positively correlated but not perfectly correlated are held in a portfolio,

• A) the portfolio standard deviation will be greater than the weighted average of the individual security standard deviations.
• B) the portfolio standard deviation will be less than the weighted average of the individual security standard deviations.
• C) the portfolio standard deviation will be equal to the weighted average of the individual security standard deviations.
• D) the portfolio standard deviation will always be equal to the securities' covariance.

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Definitions:

Quebec

A province in eastern Canada known for its French heritage, culture, and language.

Not Criminally Responsible

A legal defense asserting that at the time of committing a criminal act, a person was suffering from a mental disorder that rendered them incapable of appreciating the nature and quality of the act or knowing that it was wrong.

Criminal Law

The body of law that pertains to crime and punishment, dealing with acts considered harmful or threatening to a society's welfare.

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The legal process by which individuals with severe mental illness are placed into a treatment facility without their consent.