Question: Use the table for the question(s) below. Consider the following expected returns, volatilities, and correlations: Return Expected Standard Correlation with Correlation with Correlation with Stock
Use the table for the question(s) below. Consider the following expected returns, volatilities, and correlations: Return Expected Standard Correlation with Correlation with Correlation with Stock Deviation Duke Energy Microsoft 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 1.0 Which of the following combinations of two stocks would give you the biggest reduction in risk? O A Wal-Mart and Microsoft B. Microsoft and Duke Energy OC. Duke Energy and Wal-Mart OD. No combination will reduce risk. 0.7
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