Asked by
victoria saunders
on Oct 20, 2024
Verified
Which of the following correlation coefficients will produce the most diversification benefits?
A) -.6
B) -.9
C) 0
D) .4
Correlation Coefficients
A measure that indicates the extent to which two variables change together, ranging from -1 to 1, where 1 means perfect positive correlation, and -1 means perfect negative correlation.
Diversification Benefits
The reduction in investment risk that is achievable by holding a variety of different investment instruments that have low correlation with each other.
- Absorb the concept of correlation and its impact on the level of risk in a portfolio.
Verified Answer
JC
Learning Objectives
- Absorb the concept of correlation and its impact on the level of risk in a portfolio.
Related questions
What Is the Standard Deviation of a Portfolio of Two ...
What Is the Most Likely Correlation Coefficient Between a Stock-Index ...
What Is the Standard Deviation of a Portfolio of Two ...
Investing in Two Assets with a Correlation Coefficient of 1 ...
Which of the Following Correlation Coefficients Will Produce the Least ...