QUESTION 17

1. Assume that Portfolio V and the market are compared. Which of the following correlations between Portfolio V and the market would provide for the largest percent change in Portfolio V being attributable to a change in the market?

   		a. Correlation = -1.00.
   		b. Correlation = -0.50.
   		c. Correlation = +0.38.
   		d. Correlation = +0.78.

QUESTION 18

1. Assume that Dinah wants to add a security to her portfolio that will reduce the variability in the portfolio returns. Which of the following securities would you recommend if the correlations below are between each security and Dinahs portfolio?

   		a. Security A: Correlation = -0.82.
   		b. Security B: Correlation = -0.50.
   		c. Security C: Correlation = +0.38.
   		d. Security D: Correlation = +0.78.