The portfolio with a standard deviation of zero (See Figure 7.1)
A) is comprised of Assets A and B.
B) is comprised of Assets A and C.
C) is not possible.
D) cannot be determined.

Question

Quizplus · Accepted Answer

A portfolio with a standard deviation of zero indicates that the assets in the portfolio are perfectly positively correlated, meaning their returns move in exact unison. Only Assets A and B have a perfect positive correlation, making them the only possible combination for this type of portfolio.

The Portfolio with a Standard Deviation of Zero (See Figure