Fin402- Final Exam

Due Week 5 - Day 7

Complete the following examandpost it to the Assignmentsection.

All Students

FINAL EXAM

1) A portfolio with acorrelation of 1 is not awell-diversified portfolio. What must you as an investor do to structure a portfolio with negative correlation?

To structure a negative correlation portfolio one must add more negative correlated stocks to the portfolio, thus outweighing the positive correlated stocks. This will help to bring the positively correlated stocks into negatively correlated stocks.

2) What macroeconomic variable do you believe has thegreatest impact on interest rates? Inflation? Briefly explain.

The greatest macroeconomic variable to impact both interest and inflation is money supply. An increase in money supply causes inflation and to...