This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Optimal risk reduction takes place when combining assets whose correlation coefficient is 0.0. ... (Read 114 times)

littleanan

  • Hero Member
  • *****
  • Posts: 575
on: Jul 10, 2018
Optimal risk reduction takes place when combining assets whose correlation coefficient is 0.0.
 
  Indicate whether the statement is true or false.

Question 2

The truly wonderful thing about diversification is that 100 of risk can be diversified away, given a large enough portfolio.
 
  Indicate whether the statement is true or false.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

diana chang

  • Sr. Member
  • ****
  • Posts: 288
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: FALSE
Explanation: Optimal risk reduction takes place when combining assets whose correlation coefficient is -1.0.

Answer to Question 2

Answer: FALSE
Explanation: Only unsystematic risk can be diversified away, not total risk.


littleanan

  • Member
  • Posts: 575
Reply 2 on: Jul 10, 2018
Gracias!

lkanara2

  • Member
  • Posts: 329
Reply 3 on: Yesterday
Excellent

« previous next »
 

Did you know?

Throughout history, plants containing cardiac steroids have been used as heart drugs and as poisons (e.g., in arrows used in combat), emetics, and diuretics.

Did you know?

Aspirin may benefit 11 different cancers, including those of the colon, pancreas, lungs, prostate, breasts, and leukemia.

Did you know?

Drug abusers experience the following scenario: The pleasure given by their drug (or drugs) of choice is so strong that it is difficult to eradicate even after years of staying away from the substances involved. Certain triggers may cause a drug abuser to relapse. Research shows that long-term drug abuse results in significant changes in brain function that persist long after an individual stops using drugs. It is most important to realize that the same is true of not just illegal substances but alcohol and tobacco as well.

Did you know?

According to the Migraine Research Foundation, migraines are the third most prevalent illness in the world. Women are most affected (18%), followed by children of both sexes (10%), and men (6%).

Did you know?

HIV testing reach is still limited. An estimated 40% of people with HIV (more than 14 million) remain undiagnosed and do not know their infection status.

These species are all at risk of extinction. Species with “slow” life-h These species are all at risk of extinction. Species with “slow” life-h
Rate enhancement by entropy reduction Rate enhancement by entropy reduction
Risk Factor Categories for Atherosclerotic Cardiovascular Disease Risk Factor Categories for Atherosclerotic Cardiovascular Disease
Effleurage clockwise to abdomen. Place palm over palm, and apply effleurage in a circle around the ... Effleurage clockwise to abdomen. Place palm over palm, and apply effleurage in a circle around the ...
School can be discouraging and frustrating place for a child with a learning disability School can be discouraging and frustrating place for a child with a learning disability
Increased Cancer Risk with BRCA1 or BRCA2 Mutation Increased Cancer Risk with BRCA1 or BRCA2 Mutation
Video: EpiPen Animation (Part 1)

For a complete list of videos, visit our video library