If the Returns on Two Assets Have a Correlation Coefficient

question 34

True/False

If the returns on two assets have a correlation coefficient of one, then there are no benefits of diversification by combining these assets in a two-asset portfolio.

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Definitions:

Flynn Effect

The observed substantial and long-term increase in both fluid and crystallized intelligence test scores measured in many parts of the world over the 20th century.

Intelligence Test

A standardized assessment designed to measure human intelligence, often through tasks evaluating various cognitive abilities.

Education

The systematic process of facilitating learning, acquiring knowledge, skills, values, and beliefs through methods such as teaching, training, and research.

Fruit-Eating Monkeys

Primates that primarily consume fruits as their main dietary source, playing important roles in seed dispersal and ecosystem health.