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:

Proportionately Faster

Implies a rate of increase or growth that exceeds another in relative terms, not just in absolute numbers.

Income of Consumers

Refers to the total earnings received by individuals or households, including wages, salaries, benefits, and returns from investments.

Demand for a Product

Refers to the quantity of a product or service that consumers are willing and able to purchase at various prices during a given period of time.

Price of a Product

The amount of money required to purchase a specific good or service, determined by various factors including demand, supply, and production costs.