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Author Topic: Corporate Finance Assignment  (Read 4530 times)

clearsky

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Corporate Finance Assignment
« on: May 13, 2010, 10:12 PM »
Hi, anyone done a Corporate Finance Assignment similar to below? Or can kindly enlighten me on how to go about doing it as i got no clue how to start it. Thanks in advance.

a) For a two asset portfolio, demonstrate that portfolio risk can be reduce to zero with perfect negative correlation.

b) Explain why this is not necessarily a particularly convincing explanation for portfolio effects and demonstrate how portfolio effects arise in a rather different way for correlations close to zero.

c) Outline and discuss the reason why there is little or no portfolio effect with strong positive correlation
 

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shirah

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Re: Corporate Finance Assignment
« Reply #1 on: June 01, 2011, 01:54 AM »
Hi, anyone done a Corporate Finance Assignment similar to below? Or can kindly enlighten me on how to go about doing it as i got no clue how to start it. Thanks in advance.

a) For a two asset portfolio, demonstrate that portfolio risk can be reduce to zero with perfect negative correlation.

b) Explain why this is not necessarily a particularly convincing explanation for portfolio effects and demonstrate how portfolio effects arise in a rather different way for correlations close to zero.

c) Outline and discuss the reason why there is little or no portfolio effect with strong positive correlation
 

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