Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Firm A and Firm B are perfectly negatively correlated. If your portfolio contains an equal dollar amount of stock in Firm A and B ,

Firm A and Firm B are perfectly negatively correlated. If your portfolio contains an equal dollar amount of stock in Firm A and B, what will be the risk of the portfolio?
It will be riskless
Firm B's stock will influence it more because its variance is greater
Firm A will influence it more because its variance is greater
Firm A's stock will influence it more because its standard deviation is greater

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How To Earn 50 000 A Year Part Time

Authors: George Wallace

1st Edition

1910819352, 978-1910819357

More Books

Students also viewed these Finance questions

Question

=+ How much does he consume in periods two and three?

Answered: 1 week ago