Even If the Correlation Between the Returns on Two Securities

question 66

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:

English Auction

A type of auction in which the price ascends with each subsequent bid, and the highest bidder wins.

Willingness To Pay

The maximum amount an individual is ready to spend to acquire a good or service or to avoid something undesirable.

Expected Revenue

The anticipated amount of money that a business or project will generate over a specific period.

Probability Distribution

Represents a statistical function that describes all the possible values and likelihoods that a random variable can take within a given range.