Assume Two Securities Are Negatively Correlated

question 86

Multiple Choice

Assume two securities are negatively correlated.If these two securities are combined into an equally weighted portfolio,the portfolio standard deviation must be

• A)equal to the standard deviation of the overall market.
• B)equal to the arithmetic average of the standard deviations of the individual securities.
• C)equal to zero.
• D)less than the weighted average of the standard deviations of the individual securities.
• E)equal to or greater than the lowest standard deviation of the two securities.

---

Definitions:

Wages

Wages represent the compensation paid to employees for their labor, usually expressed as an hourly rate or annual salary, and are a key factor in employment agreements.

Salaries

Payments made to employees, often annually, for their services to an organization or company.

Health Insurance

Insurance that usually covers the expenses associated with medical and surgical procedures, prescription medications, and at times, dental care for the person insured.

Avoiding Accidents

Strategies or practices implemented to reduce the likelihood of accidents occurring in various contexts, such as workplaces or roads.