For the Standard Deviation of a Minimum Variance Portfolio of Two

question 45

Multiple Choice

For the standard deviation of a minimum variance portfolio of two assets to be zero, the correlation between the assets must be __________.

• A) - 100
• B) - 1
• C) 0
• D) + 1
• E) + 100

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Definitions:

Debt-To-Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity.

Equity Multiplier

A financial leverage ratio that shows the proportion of a company's assets that are financed by shareholder's equity.

Earnings Per Share

A financial metric that indicates the portion of a company's profit allocated to each outstanding share of common stock, providing an indicator of the company's profitability.

Price-Earnings Ratio

is a measure of a company's current share price relative to its per-share earnings, used to evaluate if a stock is undervalued or overvalued.