Even If the Correlation Between the Returns on Two Securities

question 34

True/False

Even if the correlation between the returns on two securities is +1.0, if the securities are combined in the correct proportions, the resulting 2-asset portfolio will have less risk than either security held alone.

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Definitions:

Trimethylamine

A colorless, pungent-smelling nitrogenous organic compound, found among the degradation products of proteins and used in a variety of applications.

Condensed Structural Formula

A simplified way of writing the molecular structure of a compound, showing how atoms are bonded without drawing all bonds explicitly.

Nitroamines

Organic compounds containing a nitro group (-NO2) bonded to an amine, often explosive.

Resonance Structures

Resonance Structures are alternative Lewis structures for the same molecule, illustrating the delocalization of electrons within the molecule.