Use the Table for the Question(s) Below

question 64

Multiple Choice

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

-Which of the following combinations of two stocks would give you the biggest reduction in risk?

• A) Duke Energy and Wal-Mart
• B) Wal-Mart and Microsoft
• C) Microsoft and Duke Energy
• D) No combination will reduce risk.

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Definitions:

Goods Imports

The act of bringing products or services into one country from another for the purpose of trade or sale.

Current Account Entry

Transactions that reflect the difference between a country's savings and its investment in a given period, including trade balance and foreign income.

Financial Account Entry

A record in the financial accounts that captures transactions like borrowing, lending, or investing.

Financial Account Deficit

A situation where the value of a country's imports of financial assets exceeds its exports over a given period.