What Role Does the Correlation of Two Assets Play in Computation

question 72

Essay

What role does the correlation of two assets play in computation of the expected return of the two asset portfolio?

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Definitions:

Share Dilution

the decrease in existing shareholders' ownership percentage of a company as a result of the company issuing new shares.

Government Support

Financial or policy assistance provided by governmental bodies to businesses, industries, or individuals.

NCI

Non-Controlling Interest, which refers to ownership in a subsidiary not attributable directly or indirectly to the parent company, often reflecting in consolidated financial statements.

Entity Method

An approach to accounting and financial reporting that sees the company as separate from its owners, focusing on the company's transactions and financial state.