Question
1.) Which of the following is true about the correlation coefficient? The correlation coefficient measures the degree to which assets returns tend to move together.
1.) Which of the following is true about the correlation coefficient?
The correlation coefficient measures the degree to which assets returns tend to move together.
The correlation coefficient measures the total variation of an assets returns.
The correlation coefficient measures an assets exposure to market risk.
The correlation coefficient measures the amount of stand-alone diversifiable risk of an asset.
2.) Which of the following is true about diversifiable risk?
Diversifiable risk increases at an increasing rate as you add more negatively correlated stocks to a portfolio.
All of these.
Some diversifiable risk can be eliminated by holding a well-diversified portfolio.
No diversifiable risk can be eliminated by holding a well-diversified portfolio.
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