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:

Bonus Allocation

is the distribution of financial rewards to employees beyond their regular pay, typically based on performance or company profit.

Gain Sharing

A performance-related pay strategy that offers employees financial rewards based on improvements in productivity, efficiency, or profitability within their work group or organization.

Higher Performers

Employees who consistently exceed job expectations and perform at levels beyond their peers.

Nonmonetary Award

A reward given to employees that does not involve financial compensation, often used to acknowledge accomplishments or motivate performance.