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If you have two securities with different returns but same variances, what is the likely outcome for the portfolio of these two securities (based on

  1. If you have two securities with different returns but same variances, what is the likely outcome for the portfolio of these two securities (based on Markowitz portfolio construction)?

  1. Portfolio Return will be higher than the return of either security
  2. Portfolio Risk will be higher than the risk of the two securities
  3. Portfolio Risk will be the same as the two securities risk
  4. Portfolio Risk will be lower than the risk of the two securities

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