The Creation of a Portfolio by Combining Two Assets Having

question 148

True/False

The creation of a portfolio by combining two assets having perfectly positively correlated returns cannot reduce the portfolio's overall risk below the risk of the least risky asset, whereas a portfolio combining two assets with less than perfectly positive correlation can reduce total risk to a level below that of either of the components.

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Definitions:

Wi-Fi

A technology that allows devices to connect to the internet wirelessly using radio waves within a short range.

Phoneline

A communication technology that employs a wire or optical fiber telephone line for voice or data transmission traditionally associated with landline phones.

Ethernet

A family of computer networking technologies commonly used in local area networks (LAN), metropolitan area networks (MAN) and wide area networks (WAN).

Federal Communication Commission

A United States government agency that regulates interstate and international communications by radio, television, wire, satellite, and cable.