A Portfolio That Combines Two Assets Having Perfectly Positively Correlated

question 104

True/False

A portfolio that combines two assets having perfectly positively correlated returns can not reduce the portfolio's overall risk below the risk of the least risky asset.

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Definitions:

Foreign Exchange Gain

A gain resulting from changes in exchange rates affecting the value of assets, liabilities, or transactions denominated in foreign currencies.

Income Statement

A financial statement that reports a company's financial performance over a specific period, illustrating revenues, expenses, and net income or loss.

Interest-Bearing Note

A debt instrument that pays interest to the lender over the term of the loan.

Put Option

A financial contract giving the option holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.