Explain in detail what the diagram above represent. In your analysis explain what -1, 0, 0.30 and1 as mentioned in the diagram represent. In addition indicate which point is the best for an investor hoping to achieve full diversification benefit.

Flag question Expected Return (%) 14 13- 12- 11- 10 9 00 8 7- 6- 5- 02 4 96 8 P=0 10 p=.30 D p=1 12 14 16 18 20 Standard Deviation (%)