Consider an Investment Opportunity Set Formed with Two Securities That

question 85

Multiple Choice

Consider an investment opportunity set formed with two securities that are perfectly negatively correlated. The global minimum-variance portfolio has a standard deviation that is always ________.

• A) equal to the sum of the securities' standard deviations
• B) equal to -1
• C) equal to 0
• D) greater than 0

---

Definitions:

Sampling Error

The discrepancy between the estimated population parameter and the actual population parameter due to the sample not being a perfect representation of the population.

Probability Distribution

A mathematical representation that outlines all possible outcomes and their probabilities for a random variable within a specified scope.

Sample

A subset of individuals, items, or events from a larger population used to draw conclusions about that population.

Population Mean

The average of all the values in a population. It is a parameter that describes the central tendency of the entire population.