5 c 1 d 0 ans c 6 in order to completely eliminate

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Unformatted text preview: s can take can be: a. zero to +1 b.  ­1 to +1 c.  ­ infinity to +infinity d. zero to + infinity ANS: B 5. For a two ­stock portfolio, the maximum reduction in risk occurs when the correlation coefficient between the two stocks is: a. +1 b.  ­0.5 c.  ­1 d. 0 ANS: C 6. In order to completely eliminate the risk (i.e., a portfolio standard deviation of zero) in a two ­asset portfolio, the correlation coefficient between the securities must be ____. a. less than +1.0 b. equal to 0.0 c. less than 0.0 d. equal to  ­1.0 ANS: D 7. In general, when the correlation coefficient between the returns...
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This note was uploaded on 07/31/2013 for the course FIN 504 taught by Professor Harper,j during the Summer '08 term at Texas A&M University–Commerce.

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