The Biggest Reduction in Risk Would Be Achieved by Combining

question 42

Multiple Choice

The biggest reduction in risk would be achieved by combining two assets into a portfolio with a correlation coefficient equal to ____.

• A) −1.0
• B) −0.5
• C) 0
• D) 0.5
• E) 1.0

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Definitions:

Presence

The state of being distinctly alive or existing in a particular place or moment.

Performance

The act of carrying out a task or operation, measured by its effectiveness, efficiency, or execution quality.

Concepts

Abstract ideas or general notions that exist in the mind as representations.

Central Route

A method of persuasion that involves deeply processing the content of a message, focusing on the arguments and evidence.