When Returns Are Perfectly Positively Correlated, the Risk of the Portfolio

question 38

Multiple Choice

When returns are perfectly positively correlated, the risk of the portfolio is:

• A) zero.
• B) the weighted average of the individual security's risk.
• C) equal to the correlation coefficient between the securities.
• D) infinite.

---

Definitions:

Anterior Pituitary

The front part of the pituitary gland, producing and releasing hormones that control growth, reproduction, and other functions.

Pituitary Hormone

Hormones secreted by the pituitary gland, which regulate a wide range of bodily functions, including growth, metabolism, and reproduction.

Adrenocorticotropic Hormone

A hormone produced in the anterior pituitary gland that stimulates the production of cortisol by the adrenal cortex.

Growth Hormone

Anterior pituitary hormone that regulates growth and metabolism.