Question

1. Perfectly ________ correlated series move exactly together and have a correlation coefficient of ________, while perfectly ________ correlated series move exactly in opposite directions and have a correlation coefficient of ________.

A. negatively; -1; positively; +1

B. negatively; +1; positively; -1

C. positively; -1; negatively; +1

D. positively; +1; negatively; -1

2. If two assets having perfectly negatively correlated returns are combined in a portfolio, then some combination of those two assets will ________.

A. have more risk than either asset does on its own

B. have no risk at all

C. have a higher return than either asset does on its own

D. have a lower return than either asset does on its own

3. Systematic risk is also referred to as ________.

A. business specific risk

B. internal risk

C. nondiversifiable risk

D. maturity risk

Answer 1

Hello Sir/ Mam

1.

Perfectly positive correlated series move exactly together and have a correlation coefficient of +1, while perfectly negative correlated series move exactly in opposite directions and have a correlation coefficient of -1.

2.

If two assets having perfectly negatively correlated returns are combined in a portfolio, then some combination of those two assets will have no risk at all

3.

ystematic risk is also referred to as nondiversifiable risk

I hope this solves your doubt.

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