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Assume you currently hold one type of security and decide to construct a portfolio. Which of the ...

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Assume you currently hold one type of security and decide to construct a portfolio. Which of the ...

Assume you currently hold one type of security and decide to construct a portfolio. Which of the following would provide the greatest degree of risk reduction?
A) Adding a security that has perfect negative correlation with the one you are holding
B) Doubling the quantity of the security you already hold
C) Adding a positively, but not perfectly, correlated security
D) Adding a security that is uncorrelated with your current one
E) Adding a security that has perfect positive correlation with the one you are holding

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Corporate Finance Online

Edition: 1^st

Authors: Eakins, McNally

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We're using: Corporate Finance Online (Eakins, McNally)

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More solutions for this book are available here

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Pol. Sci. Major
Minoring in Business
Columbia University Sophomore

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bigexternal Author

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7 years ago

Firstly, thank you for responding
Secondly, ur right!

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We're using: Corporate Finance Online (Eakins, McNally)

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