Even If the Correlation Between the Returns on Two Securities

question 34

True/False

Even if the correlation between the returns on two securities is +1.0, if the securities are combined in the correct proportions, the resulting 2-asset portfolio will have less risk than either security held alone.

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Definitions:

Psychotic Disorder

A mental health condition characterized by disconnection from reality, which can include delusions and hallucinations.

Schizophrenia

A chronic brain disorder characterized by distorted thinking, perceptions, emotions, and behavior, often manifesting in hallucinations, delusions, and disorganized speech.

Occupational Functioning

Refers to the capacity and performance level of an individual in their professional role or work environment.

Reality Testing

A psychological process in which an individual differentiates between the external world and internal thoughts and perceptions.