Question: Stocks A, B, and C have the same expected return and standard deviation. The following table shows the correlations between the returns on these stocks.

Stocks A, B, and C have the same expected return and standard deviation. The following table shows the correlations between the returns on these stocks.

	Stock A	Stock B	Stock C
Stock A	+1.0
Stock B	+0.2	+0.1
Stock C	+0.0	-0.2	+1.0

Only on the basis of the information provided in the tables, which portfolio would you recommend from the following options? Justify your choice.

a) Equally invested in stocks A and B. d) Totally invested in stock A. b) Equally invested in stocks A and C. e) Totally invested in stock C. c) Equally invested in stocks B and C.

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