Use the table for the question(s) below . Consider the following expected returns, volatilities, and correlations:...

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Use the table for the question(s) below . Consider the followingexpected returns, volatilities, and correlations: Stock ExpectedReturn Standard Deviation Correlation with Duke Energy Correlationwith Microsoft Correlation with Wal Mart ? Duke Energy 14% 6% 1.01.0 ? 0.0 Microsoft 44% 24% 1.0 ? 1.0 0.7 Wal Mart ? 23% 14% 0.00.7 1.0 Which of the following combinations of two stocks wouldgive you the biggest reduction in risk? A. Microsoft and DukeEnergy B. Duke Energy and Wal Mart ? C. Wal Mart and Microsoft ? D.No combination will reduce risk.

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3.6 Ratings (637 Votes)

B Duke Energy and WalmartReduction in risk of Portfolio dependsupon the correlation between stocks Correlation values liesbetween 100 to See Answer

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Use the table for the question(s) below . Consider the followingexpected returns, volatilities, and correlations: Stock ExpectedReturn Standard Deviation Correlation with Duke Energy Correlationwith Microsoft Correlation with Wal Mart ? Duke Energy 14% 6% 1.01.0 ? 0.0 Microsoft 44% 24% 1.0 ? 1.0 0.7 Wal Mart ? 23% 14% 0.00.7 1.0 Which of the following combinations of two stocks wouldgive you the biggest reduction in risk? A. Microsoft and DukeEnergy B. Duke Energy and Wal Mart ? C. Wal Mart and Microsoft ? D.No combination will reduce risk.