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Use the table for the question(s) below. Consider the following expected returns, volatilities, and correlations: Stock Duke Energy Microsoft Wal-Mart Expected Return 14% 44% 23%

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

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