Question: Use the table for the question(s) below . Consider the following expected returns, volatilities, and correlations: Stock Expected Return Standard Deviation Correlation with Duke Energy

Use the table for the question(s) below . Consider the following expected returns, volatilities, and correlations: Stock Expected Return Standard Deviation Correlation with Duke Energy Correlation with Microsoft Correlation with Wal Mart Duke Energy 14% 6% 1.0 1.0 0.0 Microsoft 44% 24% 1.0 1.0 0.7 Wal Mart 23% 14% 0.0 0.7 1.0 Which of the following combinations of two stocks would give you the biggest reduction in risk? A. Microsoft and Duke Energy B. Duke Energy and Wal Mart C. Wal Mart and Microsoft D. No combination will reduce risk.

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