Consider an investment opportunity set formed with two securities that are perfectly negatively correlated. The global minimum-variance portfolio has a standard deviation that is always .

equal 0.

Explanation:

If both stocks are perfectly negatively correlated, then the standard deviation will always be 0. For example, if the variance of stock A is -0.5, then the variance of stock B will be 0.5, so the standard deviation will be 0. The variance of each stock will cancel the variance of the other one.

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20

answer; commerce clearing house;