Sunday, July 17, 2016

Correlation and Diversification Coursera quiz Ans

Here is Coursera course Corporate Finance Essentials quiz 2 solution. It is online course which is offered by the Coursera.

Correlation and Diversification
Quiz 2
1. 
Consider the returns of the MSCI indexes of developed and emerging markets equity in columns C and D of the Excel file that goes with this quiz. Given the returns over the 1988-2013 period, what has been the correlation between these markets?
0.67
2. 
Consider the returns of the MSCI index of developed markets equity in column C of the Excel file that goes with this quiz. Given the returns over the 1988-2013 period, and the arithmetic mean return and volatility you calculated in the first quiz (which you could also recalculate now if necessary), what has been the ‘quick-and-dirty’ risk-adjusted return of these markets?
0.54
3. 
Consider the returns of the MSCI index of emerging markets equity in column D of the Excel file that goes with this quiz. Given the returns over the 1988-2013 period, and the arithmetic mean return and volatility you calculated in the first quiz (which you could also recalculate now if necessary), what has been the ‘quick-and-dirty’ risk-adjusted return of these markets?
0.51
4. 
Which one of the statements below is false?
The correlation between two assets can only be a positive number.
5. 
Which one of the statements below is true?
When two assets with a correlation lower than 1 are combined into a portfolio, the volatility of the portfolio is lower than the weighted-average volatility of the two assets.
6. 
Of the five options below, select the one that incorrectly completes the following sentence: “Diversification can help investors …
to always be fully exposed to the best performing asset.”
7. 
Which one of the statements below is false?
Spanish investors have nothing to gain from diversifying into a risky market like China.
8. 
Which one of the statements below is true?
In the long term, the correlations across global equity markets tend to be positive.

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