I. When pAB = 1 and we know the return on Security A, we can predict the return on Security B with certainty. II. Generally, security returns display positive correlations with one another however they are less than one; this is because all securities tend not to follow the movements of the overall market. III. Any value of correlation less than +1 provides a possibility of diversification.

I and II are incorrect, III is incorrect.

I and II are correct, III is incorrect. I is incorrect,

II is correct, III is correct.

I is correct, II is incorrect, III is correct.