Combining negatively correlated assets having the same expected return results in a portfolio with ________ level of expected return and ________ level of risk.
A) a higher; a lower
B) the same; a higher
C) the same; a lower
D) a lower; a higher

Question

Quizplus · Accepted Answer

Combining negatively correlated assets results in a portfolio with a lower level of risk due to diversification. However, since the assets have the same expected return, the portfolio will maintain the same level of expected return.

Combining Negatively Correlated Assets Having the Same Expected Return Results