One of the emails sent earlier said we were not allowed to send pictures of ActEd notes. However my question is related to Figure 6.2 on page 14. (I've been to the physical hotseat but each time I look at this, I get more questions).

My questions are:

1. What do we mean by negative /positive holdings of S1 and S2 in terms of the diagram. According to the diagram, how do I deduce that when \rho =-1 we have positive holdings of both securities. How do we conclude the when \rho = 1 we have a negative holding of S2 and a positive holding of S1?

2. I understand the opportunity set to be the set of all portfolios available to the investor(i.e efficient and inefficient). On this diagram, does this mean only the points along the lines comprise the opportunity set or am I right to think that the opportunity set would be all the points within/between the the lines(eg for when \rho\ =1 that's all the points within the two lines corresponding to \rho\ =1 ).