stock M has a standard deviation of 35%. stock N has a standard deviation of 35% as well. you combine some stock m and stock n and into a portfolio which now has a standard deviation of 0%. The reason you get such an incredibly effective diversification benefit to your portfolio must be because: a. stock m and stock n and have a correlation of zero b. stock M and stock N are independent of each other c. stock M and Stock N are perfectly negatively correlated d. stock m and n are perfect positively correlated
stock M has a standard deviation of 35%. stock N has a standard deviation of 35% as well. you combine some stock m and stock n and into a portfolio which now has a standard deviation of 0%. The reason you get such an incredibly effective diversification benefit to your portfolio must be because: a. stock m and stock n and have a correlation of zero b. stock M and stock N are independent of each other c. stock M and Stock N are perfectly negatively correlated d. stock m and n are perfect positively correlated
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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stock M has a standard deviation of 35%. stock N has a standard deviation of 35% as well. you combine some stock m and stock n and into a portfolio which now has a standard deviation of 0%. The reason you get such an incredibly effective diversification benefit to your portfolio must be because:
a. stock m and stock n and have a correlation of zero
b. stock M and stock N are independent of each other
c. stock M and Stock N are perfectly negatively correlated
d. stock m and n are perfect positively correlated
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