Author Question: While the covariance between stocks can take on a negative value, a correlation coefficient must be ... (Read 130 times)

brutforce

  • Hero Member
  • *****
  • Posts: 540
While the covariance between stocks can take on a negative value, a correlation coefficient must be positive, or at a minimum, zero.
 
  Indicate whether the statement is true or false.

Question 2

The more positive the degree of correlation between two assets, the greater the risk reduction when the assets are combined.
 
  Indicate whether the statement is true or false.



ryhom

  • Sr. Member
  • ****
  • Posts: 366
Answer to Question 1

Answer: FALSE
Explanation: Correlation coefficients can range from a value of +1.0 to -1.0.

Answer to Question 2

Answer: FALSE
Explanation: The LOWER the degree of correlation between two assets, the greater the risk reduction when the assets are combined.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Human neurons are so small that they require a microscope in order to be seen. However, some neurons can be up to 3 feet long, such as those that extend from the spinal cord to the toes.

Did you know?

There used to be a metric calendar, as well as metric clocks. The metric calendar, or "French Republican Calendar" divided the year into 12 months, but each month was divided into three 10-day weeks. Each day had 10 decimal hours. Each hour had 100 decimal minutes. Due to lack of popularity, the metric clocks and calendars were ended in 1795, three years after they had been first marketed.

Did you know?

The most destructive flu epidemic of all times in recorded history occurred in 1918, with approximately 20 million deaths worldwide.

Did you know?

Medication errors are more common among seriously ill patients than with those with minor conditions.

Did you know?

Nearly 31 million adults in America have a total cholesterol level that is more than 240 mg per dL.

For a complete list of videos, visit our video library