Two Assets Have a Coefficient of Correlation of -

question 77

Multiple Choice

Two assets have a coefficient of correlation of -.4. Asset A has a standard deviation of 20% and asset B has a standard deviation of 40%. Relative to holding a portfolio consisting of 100% of Asset B, what happens to risk if you combine these assets into a 50-50 weighted portfolio?

• A) Combining these assets will increase risk.
• B) Combining these assets will have no effect on risk.
• C) Combining these assets may either raise or lower risk.
• D) Combining these assets will reduce risk.

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Union Concentration

The degree to which labor union membership is concentrated in certain industries, sectors, or among specific types of workers.

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Government-provided support in the form of financial aid or services aimed at ensuring the well-being of its citizens, especially those facing poverty or social exclusion.