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In a two-asset portfolio, reducing the correlation between the two assets moves the efficient frontier in which direction? A. The efficient frontier is stable unless the asset’s expected volatility changes. This depends on each asset’s standard deviation. B. The efficient frontier is stable unless return expectations change. If expectations change, the efficient frontier will extend to the upper right with little or no change in risk. C. The frontier extends to the left, or northwest quadrant representing a reduction in risk while maintaining or enhancing portfolio returns. |