Question: The McLure's are interested in adding two additional securities to their portfolio. Assume that the following options are available and you know the following key

The McLure's are interested in adding two additional securities to their portfolio. Assume that the following options are available and you know the following key statistics about each new security and its relationship to the existing portfolio (See table below). Based on the information provided in the table which two companies would you recommend they add to their portfolio to improve diversification?

Safe Co

Risk Co

Capital Co

Value Co

Count Co.

E(r): 5%

E(r): 15%

E(r): 7.5%

E(r): 6.8%

E(r): 9%

SD: 7

SD: 20

SD: 9

SD: 8

SD: 10

R: -.27

R: 1

R: .57

R: 0

R: .78

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