Use the following information, which describes the expected return and standard deviation for three different assets, to answer the following question(s).

-An investor will get maximum risk reduction by combining assets that are [blank].
A)negatively correlated
B)positively correlated
C)uncorrelated
D)perfectly, positively correlated

Question

Use the following information, which describes the expected return and standard deviation for three different assets, to answer the following question(s).
 
-An investor will get maximum risk reduction by combining assets that are [blank].
A)negatively correlated 
B)positively correlated 
C)uncorrelated 
D)perfectly, positively correlated

Quizplus · Accepted Answer

The investor will get maximum risk reduction by combining assets that are negatively correlated, meaning when one asset goes down, the other asset goes up, providing a hedge against losses in any one particular asset.

Use the Following Information, Which Describes the Expected Return and Standard