Which One of the Following Correlation Coefficients Must Apply to Two

question 4

Multiple Choice

Which one of the following correlation coefficients must apply to two assets if the equally weighted portfolio of those assets creates a minimum variance portfolio that has a standard deviation of zero?

• A) -1.0
• B) -0.5
• C) 0.0
• D) 0.5
• E) 1.0

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Definitions:

Different Activities

Various tasks or actions taken by individuals, organizations, or systems, distinct in nature and purpose.

Hours

The measure of time equivalent to 60 minutes, often used to quantify work or activity duration.

Diminishing Marginal Product

The decrease in the additional output that is generated when one more unit of input is added, holding all other inputs constant.

Perfectly Competitive

A market structure where there are many sellers and buyers, products are homogeneous, and there is free entry and exit, leading to the price being determined by supply and demand.