Theoretically, the Correlation Coefficient Between a Completely Diversified Portfolio and the Market

question 9

Multiple Choice

Theoretically, the correlation coefficient between a completely diversified portfolio and the market portfolio should be

• A) -1.0.
• B) +1.0.
• C) 0.0.
• D) -0.5.
• E) +0.5.

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Definitions:

Unstated Conclusion

A conclusion in an argument that is implied but not explicitly expressed by the argument's premises.

Sunny Places

Locations or areas that receive a large amount of sunlight, typically used in reference to pleasant weather or climates.

Enthymeme

An argument in which one premise is not explicitly stated but is assumed in the reasoning.

Government-Insured Deposits

Refers to deposits in a financial institution that are protected by a government agency against the failure of that institution.