In Order to Completely Eliminate the Risk (I

question 1

Multiple Choice

In order to completely eliminate the risk (i.e., a portfolio standard deviation of zero) in a two-asset portfolio, the correlation coefficient between the securities must be ____.

• A) less than +1.0
• B) equal to 0.0
• C) less than 0.0
• D) equal to -1.0

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Definitions:

Pure Monopoly

A market structure characterized by a single seller selling a unique product with no close substitutes.

Barrier To Entry

Anything that artificially prevents the entry of firms into an industry.

Ownership Of Essential Resources

Refers to the control and claim over crucial resources needed for production, such as land, water, and minerals.

Pure Monopolists

Firms that are the sole supplier of a unique product with no close substitutes, granting them significant control over pricing.