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Correlation, risk, and return Matt Peters wishes to evaluate the risk and return behaviors associated with various combinations of assets V and W under three
Correlation, risk, and return Matt Peters wishes to evaluate the risk and return behaviors associated with various combinations of assets V and W under three assumed degrees of correlation: perfectly positive, uncorrelated, and perfectly negative. The expected return and risk values calculated for each of the assets are shown in the following table, a. If the returns of assets V and W are perfectly positively correlated (correlation coefficient = +1), describe the range of (1) expected return and (2) risk associated with all possible portfolio combinations. b. If the returns of assets V and W are uncorrelated (correlation coefficient = 0), describe the approximate range of (1) expected return and (2) risk associated with all possible portfolio combinations. c. If the returns of assets V and W are perfectly negatively correlated (correlation coefficient =-1), describe the range of (1) expected return and (2) risk associated with all possible portfolio combinations. a. If the returns of assets V and W are perfectly positively correlated (correlation coefficient = +1), all possible portfolio combinations will have: (Select the best answer below.) A. a range of expected return between 11% and 14% and risk between 13% and less than 9% but greater than 0%. B. a range of expected return between 11% and 14% and risk between 13% and 0%. c. a range of expected return between 9% and 13% and risk between 11% and 14%. OD. a range of expected return between 11% and 14% and risk between 9% and 13%. i Data Table X (Click on the icon here e in order to copy the contents of the data table below into a spreadsheet.) Expected Risk (standard Asset return, deviation), or V 11% 9% 14% 13% W Print Done
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