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Assume you have three stocks A, B & C. All three stocks have the same expected return and the same risk (e.g. volatility / std. deviation). Correlations between the three stocks are as follows: Correl (A,B) = 0; Correl (B,C) = .15; Correl (A,C) = -0.1. Given your choice of holding equal amounts of A & B; B & C; or A & C, which would you hold and why?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92100025

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