Asked by Football news With Scott and Lucas on Jul 25, 2024

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Verified

It is NOT possible to construct a portfolio with zero variance of expected returns from assets whose expected returns have positive variance individually.

Zero Variance

A statistical condition in which all data points in a set are identical, offering no variability among them.

Expected Returns

The expected yield from an investment, considering the likelihood of different results.

Positive Variance

The difference between actual performance and expected performance where the actual outcome is more favorable than what was anticipated.

  • Acknowledge the limitations of diversification, particularly in eliminating all forms of risk.
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Verified Answer

BL
Braden LooperJul 26, 2024
Final Answer :
False
Explanation :
It is possible to construct a portfolio with zero variance of expected returns from assets whose expected returns have positive variance individually, through diversification and negative correlation among the assets.