Question: Consider the following expected returns, volatilities, and correlations: Stock Expected Return Standard Deviation Correlation with Duke Energy 1.00 Correlation Correlation with Microsoft with Wal-Mart 14.00%

Consider the following expected returns, volatilities, and correlations: Stock Expected Return Standard Deviation Correlation with Duke Energy 1.00 Correlation Correlation with Microsoft with Wal-Mart 14.00% 6.00% - 1.00 0.00 Duke Energy Microsoft Wal-Mart 11.00% - 1.00 1.00 0.70 24.00% 14.00% 9.00% 0.00 0.70 1.00 Determine the two stocks would give you the biggest reduction in risk. Assuming you could form a portfolio that was invested 50.00% in each stock, what would the expected standard deviation of the portfolio be

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