Final answer:
The statement is false; combining two assets with perfect positive correlation does not eliminate risk, but actually exposes the portfolio to the same risk factors. Historically, high-risk levels have led to significant losses in periods of market volatility.
Step-by-step explanation:
The statement 'Risk can be totally eliminated by combining two assets that are perfectly positively correlated' is False. When two assets are perfectly positively correlated, their prices move in the same direction to the same extent. This means that when one asset increases in value, the other one does likewise, and when one drops in value, the other follows. Combining such assets does not diversify the risk, because they are likely to lose value together during downturns.
Throughout history, a high-risk level has often proven to be detrimental to investment portfolios, particularly when markets are volatile. For example, during the 2008 Global Financial Crisis, many portfolios with high risk suffered significant losses. Conversely, portfolios that had diversified across various asset classes, particularly including assets with negative correlations, were more resistant to the downturn.