In a Two-Security Minimum Variance Portfolio Where the Correlation Between

question 59

Multiple Choice

In a two-security minimum variance portfolio where the correlation between securities is greater than −1.0,

• A) the security with the higher standard deviation will be weighted more heavily.
• B) the security with the higher standard deviation will be weighted less heavily.
• C) the two securities will be equally weighted.
• D) the risk will be zero.
• E) the return will be zero.

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Definitions:

Manufacturing Overhead Costs

Manufacturing overhead costs include all the indirect costs associated with producing goods, such as utilities, rent for production facilities, and maintenance expenses.

Machine Hours

A measurement of production time, tracking the amount of time machines are operated in the manufacturing process.

Direct Labor Hours

Time spent by workers directly involved in the production of goods or services.

Departmental Overhead Rates

Different rates used to allocate overhead costs to products or job functions, based on department-specific activities.