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
Same as 92 with "none of the above" answer…ditto for 94, 96

Question

Quizplus · Accepted Answer

None of the statements are entirely correct. The expected return and risk level of a portfolio depends on the correlation between the assets, not just whether they are positively or negatively correlated. Additionally, the weights of the assets in the portfolio also play a significant role in determining its risk and return.

Which of the Following Statements Is Most Correct