You are a risk averse investor. You are willing to add an investment with high volatility provided the correlation coefficient of this investment with other stocks in the portfolio is not less than +1.

True

False

10 points

The stock A has 25% standard deviation on its expected return and the stock B has 25% standard deviation on its expected return. The expected return for the portfolio of these two stocks will have a standard deviation of 25%.

True

False

If two stock have zero correlation, then the various combination of portfolio of these two stocks will no help to lower the risk.

True

False