In a Two-Security Minimum Variance Portfolio Where the Correlation Between

question 59

Multiple Choice

In a two-security minimum variance portfolio where the correlation between securities is greater than −1.0,

• A) the security with the higher standard deviation will be weighted more heavily.
• B) the security with the higher standard deviation will be weighted less heavily.
• C) the two securities will be equally weighted.
• D) the risk will be zero.
• E) the return will be zero.

---

Definitions:

Outgroup

A social group to which an individual does not identify or belong, often seen as fundamentally different or apart from one's ingroup.

Subculture

A cultural group within a larger culture, often having beliefs or interests at variance with those of the larger culture.

Maladapted Group

Refers to a group or social system that has evolved or been adjusted in ways that impede its members' ability to cope with or adapt to situations.

Affiliative

Relating to behaviors that promote social connections, such as bonding and friendliness.