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Use the table for the question(s) below. Consider the following expected returns, volatilities, and correlations: Expected Standard Correlation with Correlation with Correlation with Stock Return

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Use the table for the question(s) below. Consider the following expected returns, volatilities, and correlations: Expected Standard Correlation with Correlation with Correlation with Stock Return Deviation Duke Energy Microsoft Wal-Mart Duke Energy 14% 6% 1.0 -- 1.0 0.0 Microsoft 44% 24% - 1.0 0.7 Wal-Mart 23% 14% 0.0 0.7 1.0 Which of the following combinations of two stocks would give you the biggest reduction in risk? 1.0 A. Wal-Mart and Microsoft B. Duke Energy and Wal-Mart c. Microsoft and Duke Energy D. No combination will reduce risk

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