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If a Portfolio Is Constructed with Only Two Assets,of Equal

Question 4

Multiple Choice

If a portfolio is constructed with only two assets,of equal weights,and the correlation coefficient between the two assets is exactly 1.0,which of the following is true?


A) The portfolio risk reduction is maximized.
B) The return of the two assets over time are seen to follow different cycles or paths.
C) Risk is not reduced at all because of the positive correlation.
D) None of the above are true.

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