Question

The ____ the correlation in project returns is over time, the ____ will be the project portfolio risk as measured by the portfolio variance. a. lower; lower b. higher; lower c. lower; higher d. none of these

Answer 1

Answer:

lower; lower.

Explanation:

When we talk about Correlation, we mean a kind of measurement in statistics that deals with how two things or variables relate whether negatively or positively. When there is negative correlation we mean that the two quantities are inversely proportional to each other and when it is a positive Correlation we mean the two quantities are directly proportional to each other.

Portfolio means some kind of investment or financial assets. In the question, correlation in project returns means that when the return on a portfolio A moves up, half of the time the portfolio A return on other portfolio B will have to go up.

Answer 2

Answer:

A. lower; lower

Explanation:

Let me simplify my explanation by stating the general rule of risk and return that "the higher the risk, the higher the return". So in this question, the lower the project portfolio risk, the lower the correlation in project returns over time.