Use the Table for the Question(s) Below

question 14

Essay

Use the table for the question(s) below.
Consider the following expected returns, volatilities, and correlations:

-What diversification, if any, is achieved if two stocks in a portfolio are perfectly positively correlated?

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Definitions:

Irrelevant Evidence

Evidence in a legal proceeding that is not directly related to the case at hand, making it inappropriate for consideration during the decision-making process.

Circumstantial Evidence

Evidence that indirectly proves a fact through an inference, as opposed to direct observation or testimony.

Direct Evidence

Evidence that directly proves a fact without needing any inference or presumption, such as eyewitness testimony.

Hearsay

Evidence based on the reports of others rather than on personal knowledge, which is not admissible in court under most circumstances.