If the Correlation of the Returns of Two Assets Is

question 10

Multiple Choice

If the correlation of the returns of two assets is 100%, then

• A)if one asset's return increases by 10%, the second asset's return will decrease by exactly 10%.
• B)if one asset's return increases by 10%, the second asset's return will also increase, but not necessarily by 10%.
• C)if one asset's return increases by 10%, the second asset's return will usually, but not always, also increase.
• D)if one asset's return increases by 10%, the second asset's return will also increase by exactly 10%.