In a Two-Asset Portfolio,Stock a and Stock B Have a Measured

question 55

Multiple Choice

In a two-asset portfolio,Stock A and Stock B have a measured correlationship of r = -.80.Which of the following best describes the impact on the portfolio of having "A" and "B" in the portfolio?

• A)A and B are perfectly positively correlated, which reduces diversification.
• B)A and B are negatively correlated, which improves diversification in the portfolio.
• C)A and B are negatively correlated, which reduces diversification in the portfolio.
• D)A and B are perfectly negatively correlated, which reduces diversification.

---

Definitions:

Works Cited Page

A list of all the sources referenced in a research paper or article, formatted according to a specific citation style.

Shortcut Keys

Keyboard combinations that provide a quicker way to access commands or perform actions in software applications.

Formatting Paragraphs

Adjusting the visual presentation of text in paragraphs, including alignment, line spacing, and indentation.

Line Spacing

The distance between lines of text in a document, which can be adjusted to improve readability or fit more text on a page.