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The following statements were made by a portfolio manager: When the correlation between the securities is +1, an increase in the returns of the portfolio
The following statements were made by a portfolio manager:
- When the correlation between the securities is +1, an increase in the returns of the portfolio can happen only with an increase in the risk of the portfolio.
- When the correlation between the securities is 0 or 1, an increase in the returns of the portfolio can happen despite a decrease in the risk of the portfolio.
Which of the following is true?
Group of answer choices
Only Statement II is correct.
Only Statement I is correct.
Both the statements are correct.
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