A Correlation Coefficient of ________ Provides No Risk Reduction

question 8

Multiple Choice

A correlation coefficient of ________ provides no risk reduction.

• A) 0
• B) −1
• C) +1
• D) +0.5

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Definitions:

Face Value

The nominal or dollar value printed on a bond, bill, or other financial instrument, representing the amount to be repaid at maturity.

Coupon Rate

The annual rate of interest specified on a bond, expressed as a percentage of its face value.

Annual Coupon

The yearly interest payment paid to bondholders, typically expressed as a percentage of the bond's face value.

Face Value

The nominal or initial value stated on financial instruments like bonds or stock certificates, not necessarily equal to the market value.