Which of the following correlation coefficients is not possi

Solution

The correlation coefficients is not possible in the creation of a portfolio is;

b. -1.5

It is so because correlation coefficient explain the relationship between the two assets.

To create a portfolio we could take assets which are either move completely together or assets which are move in completely opposite direction or somewhere in between.

Also the correlation coefficient could only be in the +1 and -1 that means the Correlation coefficient could only take values in between [1, -1] where correlation coefficient with value 1 shows that the assets are moving complete together and correlation coefficient with value -1 shows that the assets move complete in opposite way.

So -1.5 is not a value that a correlation coefficient could take because it is not lie in [1, -1].