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?

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Definitions:

Discriminate Colors

The ability to distinguish and differentiate between colors, an important aspect of human visual perception.

Months of Age

An expression of age in units of months, often used to mark developmental milestones in infants and toddlers.

Crawling

The movement by which babies and some animals move forward on their hands and knees or by dragging their body close to the ground.

Mirror Neuron

A type of neuron believed to be crucial for understanding others' actions, intentions, and emotions, fostering empathy and social learning.