Chapter 11 of the text as well as Figure 11.6 illustrates the important concept in portfolio theory when combining assets into a portfolio. The dotted (straight) line between points X and Y on the graph represents what aspect of portfolio theory?

	A.	High gains from diversification as the correlation coefficient between X and Y is close to or equal to its lowest value of -1.00.
	B.	The maximum gain from diversification where risk is entirely removed.
	C.	Little to no gain from diversification as the correlation coefficient between X and Y is positive and close to or equal to its highest value of 1.00.
	D.	Very high gains from diversification although short of the maximum gain as the correlation coefficient between X and Y is negative.
	E.	Moderate to high gains from diversification as the correlation coefficient between X and Y is close to or equal to 0.00.

Figure 11.6 Diversification Between Two Assets E(R) Y Expected Return E(R) Oy Standard Deviation