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Multiple Choice

$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$$\text { Investiment } A$ $\quad$$\quad$$\quad$$\quad$$\quad$$\text { Investment } B$
$\begin{array}{|l|l|l|l|l|}\hline & \text { Good year } & \text { Bad year } & \text { Good year } & \text { Bad year } \\\hline \text { Probability } & 0.80 & 0.2 & 0.90 & 0.1 \\\hline \text { Pay-off } & 140 & 45 & 110 & 70 \\\hline\end{array}$
-The key factor in asset choice is the effect of the additional asset on the existing portfolio.To calculate the change in portfolio variance and expected return with an additional asset,what does the investor require?

A) Expected return of the new asset
B) Its variance
C) The covariance between the new asset and the other assets in the existing portfolio
D) All of these choices