In order to construct a riskless portfolio using two risky shares, one would need to find two shares with a correlation coefficient of ________.
A)1.0
B)0.5
C)0
D)-1.0

Question

Quizplus · Accepted Answer

A correlation coefficient of -1.0 indicates a perfect negative correlation, which means that the two shares move in opposite directions. By combining these two shares in the portfolio, the risk can be eliminated to create a riskless portfolio.

In Order to Construct a Riskless Portfolio Using Two Risky