Theoretically, the Correlation Coefficient Between a Completely Diversified Portfolio and the Market

question 9

Multiple Choice

Theoretically, the correlation coefficient between a completely diversified portfolio and the market portfolio should be

• A) -1.0.
• B) +1.0.
• C) 0.0.
• D) -0.5.
• E) +0.5.

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Definitions:

Negotiated Contracts

Legal agreements formed through the process of discussion and compromise between two or more parties, often relating to employment or services.

Unionists

Individuals or members of a labor union representing workers' interests.

Productivity

The measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs.

Efficiency

The ratio of useful output to total input, referring to the effective use of resources without waste.