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Suppose you have a portfolio consisting only of $20,000 invested in Granger Inc. stock, and that you are considering lowering the risk you face by

Suppose you have a portfolio consisting only of $20,000 invested in Granger Inc. stock, and that you are considering lowering the risk you face by adding a $10,000 investment in the stock of IBM. For you to achieve a diversification benefit by adding IBM, which of the following is required?

The stock of IBM have a beta < 1.0

The stock returns of Granger and IBM must have a correlation coefficient of zero

The stock returns of Granger and IBM must have a correlation coefficient

The stock returns of Granger and IBM must have a correlation coefficient < 1.0

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