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You are comparing five separate portfolios comprised of twostocks each that have varying characteristics. Which characteristicis most indicative of a diversified portfolio? a. The standard

You are comparing five separate portfolios comprised of twostocks each that have varying characteristics. Which characteristicis most indicative of a diversified portfolio?

a. The standard deviation of the portfolio equals the weightedaverage standard deviation of the two securities.

b. The correlation between the two securities is equal tozero.

c. The covariance of the two securities is equal to one.

d. There is a highly positive covariance between the twosecurities.

e. The correlation between the two securities is negative.

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