A Portfolio of Two Securities That Are Perfectly Positively Correlated

question 54

Multiple Choice

A portfolio of two securities that are perfectly positively correlated has

• A) A standard deviation that is the weighted average of the individual securities standard deviations.
• B) An expected return that is the weighted average of the individual securities expected returns.
• C) No diversification benefit over holding either of the securities independently.
• D) Choices b and c
• E) All of the above.

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Definitions:

Lifetime Subscription

A one-time payment plan for a product or service that grants the subscriber access for the lifetime of the product or service.

Annually

Occurring once every year.

Renewal Rate

The percentage of customers or subscribers who choose to renew their contracts or agreements over a specified period.

Constant Dollar Withdrawals

A method of withdrawing funds from an investment account where the amount adjusted for inflation remains the same over time.