Portfolio Management Q146

0. An investment manager in an asset management company is in the process of defining asset classes. Which of the following activities would be most appropriate considering the paired correlations of assets?

Answer
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Option : B
Explanation : When defining asset classes, paired correlations of assets should be relatively high within an asset class. However, paired correlations of assets between different asset classes should be low in order to provide diversification relative to other asset classes.

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