Question 2 0/0.5 points Efficient portfolios of N risky securities are portfolio

Question

Question 2 0/0.5 points Efficient portfolios of N risky securities are portfolios that a are formed with the securities that have the highest standard deviations regardless of their returns b) have the lowest risk for given level of return c) are selected from those securities with the highest returns regardless of their standard deviations d) have the highest risk and rates of return. e) have the lowest standard deviations and the lowest rates of return. Question 3 0/0.5 points Suppose that a stock portfolio and a bond portfolio have a negative correlation. This means that a) the covariance of the stock and bond portfolios will be positive or negative b)the returns on the stock and bond portfolios tend to move inversely C) the covariance of the stock and bond portfolios will be positive d) the returns on the stock and bond portfolios tend to vary independently of each other e) the returns on the stock and bond portfolios tend to move together

Explanation / Answer

2. Option B. Efficient portfolios are build in such a way that it has less risk at a given level of return

3. Option B. Negative correlation means when one vaiable increases other decreases

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