You Wish to Diversify Your Single-Security Portfolio in a Way

question 53

Multiple Choice

You wish to diversify your single-security portfolio in a way that will maximize your reduction in risk.Which of the following securities should you add to your portfolio?

• A)Treasury bills that have a correlation coefficient of 0.0 with your current security
• B)Alpha Company stock that has a correlation coefficient of -0.25 with your current security
• C)Beta Company stock that has a correlation coefficient of 0.50 with your current security
• D)Delta Company bonds that have a correlation coefficient of 0.36 with your current security

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