Consider the characteristics of the following three stocks:

\begin{array} { l l l } \hline & \begin{array} { l } \text { Expected } \\\text { Return }\end{array} & \begin{array} { l } \text { Standard } \\\text { Deviation }\end{array} \\\hline \begin{array} { l } \text { Thumb } \\\text { Devices }\end{array} & 13 \% & 23 \% \\\text { Air Comfort } & 10 \% & 19 \% \\\text { Sport Garb } & 10 \% & 17 \% \\\hline\end{array}

The correlation between Thumb Devices and Air Comfort is -0.12. The correlation between Thumb Devices and Sport Garb is 0.89. The correlation between Air Comfort and Sport Garb is -0.85. If you can pick only two stocks for your portfolio, which would you pick? Why?
A)Combine Thumb Devices and Sport Garb because they have a high correlation.
B)Combine Thumb Devices and Air Comfort because of high standard deviations.
C)Combine Air Comfort and Sport Garb due to negative correlation.
D)Combine Thumb Devices and Sport Garb because Thumb Devices has the highest return and Sport Garb has the lowest standard deviation.

Which of the Following Statements Is Correct Regarding Total Risk

Multiple Choice

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