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Elizabeth's Portfolio
Elizabeth has decided to form a portfolio by putting 30% of her money into stock 1 and 70% into stock 2.She assumes that the expected returns will be 10% and 18%,respectively,and that the standard deviations will be 15% and 24%,respectively.
-{Elizabeth's Portfolio Narrative} Describe what happens to the standard deviation of the portfolio returns when the coefficient of correlation ρ decreases.
Increasing-Cost Industry
An industry where the costs of production increase as the industry expands, often due to factors like limited resources or increased prices for inputs.
Market Demand
The total demand for a product or service within a particular market, summed from all individual demands.
LAC Curve
Long-Run Average Cost curve, a graphical representation showing the minimum average cost of production at different levels of output when input prices and technology remain constant.
Constant-Cost Industry
A constant-cost industry is an industry where the costs of production, including inputs, do not change as the industry's output changes.
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