Question

QUESTION 5 If two assets with return correlation coefficients equal to one make up a portfolio,...

QUESTION 5

  1. If two assets with return correlation coefficients equal to one make up a portfolio, then the portfolio does not take advantage of any diversification benefits.

    True

    False

1 points   

QUESTION 6

  1. A nannying business could diversify by:

    offering services in different locations

    offering both long-term care and casual babysitting

    obtaining funding from different sources (for example, a bank loan and family)

    all of the above

    Which is an example of diversification?

    Investing in different investment classes (for example, property and shares and cash)

    Investing in companies from different industries

    investing in companies from different parts of the world

    all of the above

    1 points   

    QUESTION 8

    Diversification is commonly explained with the phrase:

    "Don't put all your eggs in one basket"

    "Always invest everything you have into ONE single thing"

    "Investors require compensation (return) for holding a particular level of risk"

    "Don't put the cart before the horse"

    ......................

    A collection of investments held by a person or organisation is called:

    lots of money

    a portfolio

    infinite possiblity

    a bucket

    1 points   

    QUESTION 10

    If you are building a portfolio, then you desire assets that have a correlation coefficient of one.

    True

    False

    please make sure that the answer correct.

Homework Answers

Answer #1

QUESTION 5: ANS: TRUE

REASSON: COEFFICIENT OF CORRELATION: It shows the relationship or association between two variable.It expresses the degree of closeness between two variables .The value of r ranges between -1 and + 1

+1 = It is a Perfect Positive Correlated Portfolio and Portfolio Risk will be Maximum.

QUESTION 6: ANS: all of the above

QUESTION 8: AND: "Don't put all your eggs in one basket"

A collection of investments held by a person or organisation is called A PORTFOLIO:

QUESTION 10: ANS: FALSE

REASSON: COEFFICIENT OF CORRELATION: It shows the relationship or association between two variable.It expresses the degree of closeness between two variables .The value of r ranges between -1 and + 1

-1 = It is a Perfect Negative Correlated Portfolio and Portfolio Risk will be minimum.

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