The marketing department of a large manufacturing company has been asked by the board of directors to start formulating a strategy to expand sales into a completely new and growing market. The company has not been active in the market to date because of the perceived high risk of the new market. In the past, the board had always avoided higher-risk activities, so the boards request took the marketing manager by surprise. In response to the boards request, the marketing manager came up with the following risk map. The darkened circle represents the perceived risk of the new project.

The chief investment officer (CIO) of an investment company could do all of the following to lessen the companys investment risk except a) diversify the companys investment portfolio to include assets that are not closely correlated to each other. B.use the futures market as a speculative tool. C.take immediate action to decrease investment exposure. D.use the options market as a hedging tool.

Risk Map 9 8 7 Monetary Impact 3 2 1 1 2 3 4 5 6 7 8 9 Frequency/Probability