Combining Two Assets Having Perfectly Positively Correlated Returns Will Result

question 138

Multiple Choice

Combining two assets having perfectly positively correlated returns will result in the creation of a portfolio with an overall risk that

• A) decreases to a level below that of either asset.
• B) increases to a level above that of either asset.
• C) remains unchanged.
• D) stabilizes to a level between the asset with the higher risk and the asset with the lower risk.

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Definitions:

Core Aspects

The fundamental elements or characteristics that define something's essence or most important features.

Making A Sale

The process of persuading a potential customer to buy a product or service, culminating in the exchange of goods or services for money or its equivalent.

Potential Buyer's Interest

The likelihood or degree of interest that potential customers may have in purchasing a product or service.

Buyer's Belief

The perceptions and assumptions that consumers hold about a product, service, or brand, influencing their purchasing decisions.