The VaR of a portfolio will be maximized when the pairwise correlations between the returns of the underlying assets are perfectly positive. This is because when the returns of the assets in a portfolio are positively correlated, the portfolio is less diversified than when the returns are less correlated or negatively correlated. The extreme case situation occurs when the assets are perfectly positively correlated. In such a situation, the VaR of the portfolio will be at its highest. This is due to the fact that positive correlation implies that the assets tend to move in the same direction. Therefore, if one asset experiences a loss, it is likely that the other assets will also experience a loss, leading to a larger overall loss for the portfolio. This increases the risk of the portfolio, and hence, the VaR is maximized.

Choice B is incorrect. Perfectly negative correlation between the returns of the underlying assets in a portfolio would not maximize the VaR. In fact, it would minimize it because one asset's gain would offset another’s loss.