You Have a Portfolio of Two Risky Stocks That Has

question 44

Multiple Choice

You have a portfolio of two risky stocks that has no diversification benefit.The lack of any diversification benefit must be due to the fact that:

• A)the returns on the two stocks move perfectly in sync with one another.
• B)the returns on the two stocks move perfectly opposite of one another.
• C)one security must be a risk-free security.
• D)the portfolio is equally weighted between the two stocks.
• E)the two stocks are completely unrelated to one another.

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