Quiz Ch 06 – Assessing Diversification Benefit from Correlation Coefficients
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
Which is anticipated to provide the smallest diversification advantage?
Which is anticipated to provide the smallest diversification advantage?
What is the comparison between the sensitivity of stock A, with a beta of 1.2, and stock B, with a beta of 1, to changes in the market?
What term describes the graphical representation of a security’s excess return about the market’s excess return?
What defines a complete portfolio?
Which one is likely to yield the greatest diversification advantages?
Which variables contribute to the systematic part of a stock’s return?
What specific correlation between the securities is required to achieve diversification benefits by merging securities in a portfolio?
What type of risk can diversification potentially decrease or remove?
What caused the depletion of the 401k retirement accounts of many Enron Corporation employees, both current and retired?
What correlation coefficient between two risky stocks is necessary to construct a riskless portfolio?