Alpha Corporation is evaluating two investment options: Option A, which has an expected return of 8% and
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Question:
Alpha Corporation is evaluating two investment options: Option A, which has an expected return of 8% and a standard deviation of 10%, and Option B, which has an expected return of 12% and a standard deviation of 15%. If the correlation coefficient between the two options is 0.6, calculate the portfolio standard deviation and analyze the benefits of diversification.
Calculate the portfolio standard deviation and analyze the benefits of diversification for Alpha Corporation.
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