Consider the below and then answer the related questions.

You have computed the correlations for different sets of stocks. They are as follows:Stocks K and B Correlation = .78;Stocks K and C Correlation = .42; Stocks K and D Correlation = .65

Each stock has the same expected return of 9.5% and their standard deviations are all equal at 21.75%.

Your goal is to maximize your return per unit of risk. If your entire portfolio is now composed of Stock K and you can add some ofonly one(B, C or D)stock to your portfolio,which stock would you choose? Why?