Portfolio which consists of perfectly positive correlated assets having no effect of___________?
Correct answer: D. Diversification
- A. Negativity
- B. Positivity
- C. Correlation
- D. Diversification
Explanation
With perfectly positively correlated assets, both assets move in the same direction and diversification cannot reduce portfolio risk. This means there is no diversification benefit.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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