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Correlation between the returns of assets a and b

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Reference no: EM132460375

Problem: Every time the return of asset A is x%, the return of asset B is -0.5*x%. For instance, if A goes up by 1%, B goes down by 0.5%.

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Question 1: What is the correlation between the returns of assets A and B?

Question 2: What is the lowest possible standard deviation that could be achieved by constructing a portfolio of A and B? How can you achieve it?

Reference no: EM132460375

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