Question
Which of the following statements concerning financial risk is false? A. Generically, financial risk is related to the probability of a return that is less
Which of the following statements concerning financial risk is false? |
A. Generically, financial risk is related to the probability of a return that is less than expected. B. If the returns on two investments move in unison (are perfectly positively correlated), combining the two into a portfolio will lower risk. C. If the returns on two investments move in unison (are perfectly positively correlated), combining the two into a portfolio will not affect risk. D. In the real world, it is not possible to create a riskless portfolio because all investment returns, to a greater or lesser extent, move with the overall economy. E. Assume you know for certain that an investment will return negative 10 percent. (In other words, the probability of a negative 10 percent return is 100 percent.) Although the expected return is negative, the investment is riskless.
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