Which of the following statements about the riskiness of a most correct? If the

Question

Which of the following statements about the riskiness of a most correct? If the returns are perfectly positively correlated, all risk can be eliminated. if the returns are perfectly negatively correlated, no risk can be eliminated If the returns have a correlation coefficient of +0.7. some but not all risk can be eliminated. If the returns have a correlation coefficient of -0.4. all risk cat be efaminated. If the returns are uncorrelated (correlation coefficient of 0.0). all risk can be eliminated.

Explanation / Answer

The Answer is : If the Returns have a correlation coefficient of -.4 all risk can be eliminated. (As the Securities with negative correlation could eliminate risk altogether)

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