Question
Read the following 5 statements and decide which of them are TRUE: Select one or more: a. Correlation is relevant for portfolio management, since it
Read the following 5 statements and decide which of them are TRUE: Select one or more: a. Correlation is relevant for portfolio management, since it affects the expected return of the portfolio. b. When including a risk-free investment, the efficient frontier becomes a straight line through the portfolio of risky investments offering the highest Sharpe Ratio. c. The Sharpe Ratio is a measures for the risk premium received relative to the volatility of the portfolio. d. Investors following the mean-variance principle will always invest in the alternative with lower risk. e. A very large portfolio consisting of only perfectly positively correlated assets does not offer any diversification benefits.
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