In general, when the correlation coefficient between the returns on two securities is ____, the risk of a portfolio is ____ the weighted average of the total risk of the two individual securities.
A) equal to +1.0; equal to
B) less than +1.0; greater than
C) greater than -1.0; less than
D) None of these are correct

Question

Quizplus · Accepted Answer

When the correlation coefficient is equal to +1.0, the securities move perfectly in tandem, so the portfolio risk is equal to the weighted average of the individual risks.

In General, When the Correlation Coefficient Between the Returns on Two