Statement 1: If you can find two risky securities with a correlation of -1, theoretically you can construct a risk-free portfolio using the two securities.

Statement 2: Stocks A and B have returns that are independent of one another. (i.e., correlation coefficient r = zero.) There is no diversification benefit that can be achieved by combining A and B in a portfolio.

Question 17 options:

	Both Statements are correct.
	Only Statement 1 is correct.
	Neither Statement is correct.
	Only Statement 2 is correct.