A Two-Asset Portfolio with a Standard Deviation of Zero Can

question 14

Multiple Choice

A two-asset portfolio with a standard deviation of zero can be formed when

• A) the assets have a correlation coefficient less than zero.
• B) the assets have a correlation coefficient equal to zero.
• C) the assets have a correlation coefficient greater than zero.
• D) the assets have a correlation coefficient equal to one.
• E) the assets have a correlation coefficient equal to negative one.

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Definitions:

Tidal Volume

The volume of air moved into or out of the lungs during normal breathing.

Inspiratory Reserve Volume

The additional amount of air that can be inhaled after a normal inhalation, increasing lung volume.

Expiratory Reserve Volume

The maximum volume of air that can be forcibly exhaled after the completion of a normal, quiet exhalation.

Total Lung Capacity

The maximum amount of air the lungs can hold, including inspiratory and expiratory reserve volumes and the tidal volume.