If a Portfolio Is Constructed with Only Two Assets,of Equal

question 4

Multiple Choice

If a portfolio is constructed with only two assets,of equal weights,and the correlation coefficient between the two assets is exactly 1.0,which of the following is true?

• A)The portfolio risk reduction is maximized.
• B)The return of the two assets over time are seen to follow different cycles or paths.
• C)Risk is not reduced at all because of the positive correlation.
• D)None of the above are true.

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Definitions:

Calmodulin

A calcium-binding messenger protein present in all eukaryotic cells, involved in various cellular processes by interacting with other proteins.

Phospholipid Second Messengers

Molecules derived from phospholipids that act within cells to transmit signals from a variety of receptors to their target molecules.

Thyroid Gland

An endocrine gland that lies anterior to the trachea and releases hormones that regulate the rate of metabolism.

TSH

Thyroid-stimulating hormone, a pituitary hormone that stimulates the thyroid gland to produce thyroid hormones.