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

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

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 consists of a long position of $10,000 in Wal-Mart and a short position of $2000 in Microsoft is closest to:

		a.12%
		b.27%
		c.18%
		d.21%

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