Which One of These Statements Is Correct Regarding a Portfolio

question 9

Multiple Choice

Which one of these statements is correct regarding a portfolio of two risky securities?

• A)Both the rate of return and the standard deviation of a portfolio can be changed by changing the portfolio weights.
• B)The opportunity set is represented by a forward bending curve when expected returns are graphed against standard deviation.
• C)Diversification occurs when the correlation between two securities is +1.
• D)The standard deviation of a portfolio cannot be lower than the weighted average standard deviation of the securities held within the portfolio.
• E)The minimum variance portfolio of two stocks also represents the portfolio's highest possible rate of return.

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Definitions:

Nucleic Acids

Large biological molecules essential for all known forms of life, including DNA and RNA, which carry genetic information.

DNA and RNA

Nucleic acids that constitute the genetic material of living organisms, with DNA responsible for storing and transmitting genetic information and RNA for protein synthesis.

Condensation

The process by which gas changes into a liquid when it cools.

Water Produced

Water that is generated or obtained as a result of a process, such as the by-product of industrial processes or biochemical reactions.