Question
Explain the following statement: An asset held as part of a portfolio is generally less risky than the same asset held in isolation. What is
Explain the following statement: An asset held as part of a portfolio is generally less risky than the same asset held in isolation.
What is meant by perfect positive correlation, perfect negative correlation, and zero correlation?
In general, can the risk of a portfolio be reduced to zero by increasing the number of stocks in the portfolio? Explain.
Stock As returns in the past 5 years have been 10%, 15%, 35%, 10%, and 20%. Stock Bs returns have been 5%, 1%, 4%, 40%, and 30%. What is the correlation coefficient for returns between Stock A and Stock B? (0.35)
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