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An Investor Combines Two Securities with Perfect Negative Correlation and Achieves

question 46

Essay

An investor combines two securities with perfect negative correlation and achieves a portfolio risk of zero. Will the portfolio also have an expected return of zero?


Definitions:

Myelin Sheaths

Protective coverings around nerve fibers that facilitate the rapid transmission of neural signals.

Synaptic Vesicles

Small sacs within a neuron that store neurotransmitters, which are chemicals released to communicate with adjoining neurons at a synapse.

Dopamine System

A neural system involved in reward, motivation, and the regulation of mood, whose key neurotransmitter is dopamine.

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A progressive neurological disorder characterized by motor symptoms such as tremors, stiffness, slowness of movement, and postural instability.

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