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Ashurbanipal Ashurbanipal
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2 years ago
Two assets have a coefficient of correlation of -.4. Asset A has a standard deviation of 20% and asset B has a standard deviation of 40%. Relative to holding a portfolio consisting of 100% of Asset B, what happens to risk if you combine these assets into a 50-50 weighted portfolio?

▸ Combining these assets will increase risk.

▸ Combining these assets will have no effect on risk.

▸ Combining these assets may either raise or lower risk.

▸ Combining these assets will reduce risk.
Textbook 
Fundamentals of Investing

Fundamentals of Investing


Edition: 14th
Authors:
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Juke72Juke72
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2 years ago
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