Stock A has an expected return of 10% and standar deviation of 20%. Stock B has an expected return of 15% and standard deviation of 25%. The minimum variance portfolio (MVP) consisting of Stocks A and B has an expected return of 12% and a standard deviation of 5%. The risk-free rate equals 3%. The correlation between Stocks A and B equals________ A) +1 B) –1 C) Less than +1 and greater than –1 D) Cannot determine without more data

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter4: Equations Of Linear Functions
Section4.5: Correlation And Causation
Problem 2CYU
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Stock A has an expected return of 10% and standar deviation of 20%. Stock B has an expected return of 15% and standard deviation of 25%. The minimum variance portfolio (MVP) consisting of Stocks A and B has an expected return of 12% and a standard deviation of 5%. The risk-free rate equals 3%. The correlation between Stocks A and B equals________

A) +1
B) –1
C) Less than +1 and greater than –1
D) Cannot determine without more data 

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