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

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Accounting

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

Stock Expected Return Standard Deviation Correlation with Duke Energy Correlation with Microsoft Correlation with Wal-Mart
Duke Energy 14% 6% 1.0 -1.0 0.0
Microsoft 44% 24% -1.0 1.0 0.7
Wal-Mart 23% 14% 0.0 0.7 1.0

The expected return of a portfolio that is equally invested in Duke Energy and Microsoft is closest to:

a.

24%
b.

28%
c.

29%
d.

23%

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