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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 Retum

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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 Retum Deviation Duke Energy Microsoft Wal-Mart Duke Energy 14% 6% 1.0 -1.0 0.0 Microsoft 24% -10 1.0 0.7 Wal-Mart 23% 14% 00 0.7 1.0 Which of the following combinations of two stocks would give you the biggest reduction in risk? O A. Wal-Mart and Microsoft OB. Microsoft and Duke Energy OC. Duke Energy and Wal-Mart OD. No combination wil reduce risk

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