QUESTION 19

If other things remain the same, diversification is more effective when

securities returns are positively correlated.

securities returns are uncorrelated.

securities returns are negatively correlated.

securities returns are high.

QUESTION 20

A measure of how much the returns of two risky assets move together is

variance

standard deviation

covariance

semi-variance

QUESTION 21

The optimal risky portfolio can be identified by finding ______ .

the minimum variance point on the efficient frontier

the maximum return point on the efficient frontier

the tangency point of the capital market line and the efficient frontier

none of the above answers is correct.