Q134
Which of the following portfolios has the least reduction of risk?
A.
A portfolio with securities all having positive correlation with each other
AnswerB.
A portfolio with securities all has zero correlation with each other
C.
A portfolio with securities all having negative correlation with each other
D.
A portfolio with securities all has skewed correlation with each other
Answer: Option A
Solution
Answer: Option A
Solution:
A portfolio with securities all having positive correlation with each other has the least reduction of risk. A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds.