Which of the following statements is most correct?
A)Combining positively correlated assets having the same expected return results in a portfolio with the same level of expected return and a lower level of risk.
B)Combining negatively correlated assets having the same expected return results in a portfolio with the same level of expected return and a higher level of risk.
C)Combining positively correlated assets having the same expected return results in a portfolio with a lower level of expected return and a lower level of risk.
D)Combining negatively correlated assets having the same expected return results in a portfolio with a lower level of expected return and a lower level of risk.
E)none of the above

Question

Quizplus · Accepted Answer

Combining negatively correlated assets with the same expected return can reduce risk without affecting the expected return, but none of the statements accurately describe this scenario.

Which of the Following Statements Is Most Correct