If Two Securities Have the Same Positive Mean Returns and They

question 7

True/False

If two securities have the same positive mean returns and they are perfectly,negatively correlated,an investor in such securities will earn a positive return with zero risk.

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Definitions:

Fed

The Federal Reserve System, which is the central banking system of the United States, responsible for monetary policy, banking supervision, and financial services.

Money Expansion

An increase in the total supply of money in circulation within an economy, typically achieved through central bank operations.

Excess Reserves

Funds that banks hold over and above the legal requirement set by the central bank or banking regulator.

New Reserves

Additional funds or assets that financial institutions or countries set aside to meet future liabilities or unforeseen needs.