Question: You wish to diversify by adding a second stock to the one stock you currently own. Which of the following securities would provide the SMALLEST

You wish to diversify by adding a second stock to the one stock you currently own. Which of the following securities would provide the SMALLEST reduction in risk?

A.Security A with a correlation coefficient of

0.0

with the one stock that you currently own

B.

Security B with a correlation coefficient of 0.0 with the one stock that you currently own

C.Security C with a correlation coefficient of

0.50

with the one stock that you currently own

D.

Security D with a correlation coefficient of 0.50 with the one stock that you currently own

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