When Returns Are Perfectly Positively Correlated, the Risk of the Portfolio

question 38

Multiple Choice

When returns are perfectly positively correlated, the risk of the portfolio is:

• A) zero.
• B) the weighted average of the individual security's risk.
• C) equal to the correlation coefficient between the securities.
• D) infinite.

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Definitions:

Demographics

Demographics refer to statistical data relating to the population and the particular groups within it, often used to identify market segments.

Workforce

The group of individuals engaged in or available for work, either in a specific area or in a particular industry or organization.

Grow Older

The natural process of aging or maturing, involving biological, emotional, and psychological changes over time.

Contingent Employees

Workers hired on a temporary basis, often without the benefits afforded to full-time employees.