When the two coins have a perfect positive correlation of +1, its impossible to diversify away any

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When the two coins have a perfect positive correlation of +1, it’s impossible to diversify away any risk. You will see that a similar conclusion holds for stock portfolios.

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Principles Of Finance With Excel

ISBN: 9780190296384

3rd Edition

Authors: Simon Benninga, Tal Mofkadi

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Question Posted: Oct 19, 2024 02:01 AM

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When the two coins have a perfect positive correlation of +1, its impossible to diversify away any risk. You will see that a similar conclusion holds for stock portfolios.
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When the two coins have a perfect negative correlation of 1, we can create a risk- free asset using combinations of the two assets. In this section, youll see that a similar conclusion is true for...
When the two coins have a correlation between 1 and +1, some of the risk can be eliminated through diversification. Again, this is true for stock portfolios.
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When the two coins have a perfect positive correlation of +1, its impossible to diversify away any

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Principles Of Finance With Excel

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