Portfolio Management Q79

0. An investment in only one asset type has a worse risk-return tradeoff than an investment in a portfolio of a risk-free asset and a risky asset. This is because the correlation between the risk-free asset and the risky asset is equal to:

Answer
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Option : B
Explanation : An investment in only one asset type has a worse risk-return tradeoff than an investment in a portfolio of a risk-free asset and a risky asset because the correlation between the risk-free asset and the risky asset is equal to 0.

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