Portfolio AB was created by investing in a combination of Stocks A and B. Stock A has a beta of 1.2 and a standard deviation of 25%. Stock B has a beta of 1.4 and a standard deviation of 20%. The returns of Stock A and Stock B have a correlation of close to (but not equal to) -1. The information given here implies that risk of the portfolio can be completely eliminated by using combination of Stocks A and B. Group of answer choices True False

Portfolio AB was created by investing in a combination of Stocks A and B. Stock A has a beta of 1.2 and a standard deviation of 25%. Stock B has a beta of 1.4 and a standard deviation of 20%. The returns of Stock A and Stock B have a correlation of close to (but not equal to) -1. The information given here implies that risk of the portfolio can be completely eliminated by using combination of Stocks A and B. Group of answer choices True False

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 13QTD

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The information given here implies that risk of the portfolio can be completely eliminated by using combination of Stocks A and B.

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