Which statement is correct? It is theoretically possible to create a portfolio that offers a positive return and whose standard deviation is zero. It is theoretically impossible to create a portfolio that offers a positive return and a standard deviation of zero. The addition of an asset to a portfolio, when the correlation coefficient between the asset’s and portfolio’s returns is +1, will reduce the riskiness of the portfolio. The addition of an asset to a portfolio, when the correlation coefficient between the asset’s and portfolio’s returns is -1, will increase the riskiness of the portfolio.

Explanation: A portfolio that offers a positive return is a portfolio that has profit. This type of portfolio has assets which positive returns are greater than the negative returns, this means that the difference between the assets in the portfolio must be a positive value that is greater than zero.

Standard deviation helps to measure the dispersion of the assets value in the portfolio. If the standard deviation of the portfolio is zero, that means the assets with negative returns are equal to the assets with positive returns, therefore profit or loss are not made in the portfolio. The portfolio is not going up or down. Therefore it cannot be referred to a positive portfolio, because it is not making profit.