Which of the Following Statements Is (Are)false Regarding the Variance

question 45

Multiple Choice

Which of the following statements is (are) false regarding the variance of a portfolio of two risky securities?

• A)The higher the coefficient of correlation between securities,the greater the reduction in the portfolio variance.
• B)There is a linear relationship between the securities' coefficient of correlation and the portfolio variance.
• C)The degree to which the portfolio variance is reduced depends on the degree of correlation between securities.
• D)A and B.
• E)A and C.

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Definitions:

First Slice

The initial allocation or offering of a resource, opportunity, or product, indicating priority or privilege in its reception.

Second Slice

Implies a subsequent option or opportunity, often discussing additional choices available after an initial selection has been made.

MR>MC

A condition where marginal revenue (MR) exceeds marginal costs (MC), indicating a potential profit increase if production is expanded.

Increase Production

A process of ramping up the quantity of goods produced, often in response to higher demand or to achieve economies of scale.