Asked by Cheyna Cooper on Jun 15, 2024
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The variance of a portfolio of two investments will be equal to the sum of the variances of the two investments when the covariance between the investments is zero.
Covariance
A statistical measure that indicates the extent to which two variables change together.
Variances
Variances measure the dispersion of a set of data points around their mean value, indicating how spread out the data is.
Portfolio
A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange-traded funds (ETFs).
- Gain insight into the foundational aspects of portfolio theory in the realm of finance.
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Learning Objectives
- Gain insight into the foundational aspects of portfolio theory in the realm of finance.
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