Use the Following Three Statements to Answer This Question

question 108

Multiple Choice

Use the following three statements to answer this question:
I.There will be benefits from diversification as long as
.
II.As long as
, an equally weighted portfolio would be risk-free.
III.Diversification can never eliminate the total risk of the portfolio.

• A)I is correct, II is incorrect, III is correct.
• B)I is incorrect, II is correct, III is correct.
• C)I and II are correct, III is incorrect.
• D)I, II and II are incorrect.

---

Definitions:

Shadow Price

A monetary value assigned to currently unpriced goods or services, reflecting the opportunity cost of reallocating resources.

Objective Function

A mathematical function used in optimization to express the goal of the decision-making problem, often maximizing or minimizing some quantity.

Constraint

A Constraint refers to a limitation or restriction on the variables of an optimization problem, often defining the permissible solutions in mathematical modeling and decision-making processes.

Objective Function

A mathematical function used in optimization to define the goal of the solver, such as minimizing costs or maximizing profits.