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1a. A portfolio manager adds a new stock that has the same standard deviation of return as the existing portfolio but has a correlation coefficient
1a. A portfolio manager adds a new stock that has the same standard deviation of return as the existing portfolio but has a correlation coefficient with the existing portfolio that is less than +1. Explain why the standard deviation of the portfolio will decrease?
1b. A portfolio has assets with coefficient of correlation of 0.8. show whether sharpe ratio or Treynor ratio is appropriate for measuring the risk-adjusted return?
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