In Order to Completely Eliminate the Risk (I

question 1

Multiple Choice

In order to completely eliminate the risk (i.e., a portfolio standard deviation of zero) in a two-asset portfolio, the correlation coefficient between the securities must be ____.

• A) less than +1.0
• B) equal to 0.0
• C) less than 0.0
• D) equal to -1.0

---

Definitions:

Independent Factors

Variables in an experiment that are manipulated or changed to determine their effects on the dependent variables.

Verbal Abilities

Skills related to understanding, using, and processing words and language.

Stanford-Binet

An intelligence test designed to measure human intelligence and cognitive abilities, developed as a revision of the Binet-Simon scale.

Reliability

The degree to which test scores are free from errors of measurement, also, the capacity of an instrument to provide consistent results. See “test-re-test,” “alternative forms,” and “internal consistency”.