To Construct a Riskless Portfolio Using Two Risky Stocks, One

question 50

Multiple Choice

To construct a riskless portfolio using two risky stocks, one would need to find two stocks with a correlation coefficient of ________.

• A) -0.5
• B) 0.0
• C) 0.5
• D) -1.0

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Definitions:

Annual Target ROI

The specific return on investment a company aims to achieve within one fiscal year.

Target Return-on-investment Pricing

A pricing method aimed at achieving a specific return on investment by setting prices based on the required rate of return.

Automobile Manufacturer

A company engaged in the design, production, marketing, and selling of motor vehicles.

Book Publisher

A company or individual responsible for bringing a book to the public by handling its production, marketing, and distribution.