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Please explain. Thank you in advance Which of the following is true? i) If the correlation between two assets is +1, then a portfolio combining
Please explain. Thank you in advance
Which of the following is true? i) If the correlation between two assets is +1, then a portfolio combining these two assets will have a standard deviation that is greater than the weighted average of the two individual standard deviations. ii) The unsystematic risk of an asset can be diversified away. iii) To capture a diversification benefit, the correlation between two assets must be less than 0. iv) If the correlation between two assets is less than -1, arbitrage opportunities (reward without risk) are available. a) i, ii b) ii, iii c) ii d) iii, ivStep by Step Solution
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