An investor currently holds stock in Boing Corporation and is considering buying stock in either GEE Corporation
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Question:
An investor currently holds stock in Boing Corporation and is considering buying stock in either GEE Corporation or Westinghut Corporation.
All three stocks have the same expected return and risk.
The correlation between Boing & GEE is 0.0
The correlation between Boing and Westinghut is 0.11.
Portfolio risk is expected to:
a. Decline more when the investor buys Westinghut
b. Remain the same regardless of weather the investor buys GEE or Westinghut since all three have the same risk
c. Can't tell - need the correlation between GEE and Westinghut
d. Decline more when the investor buys GEE
e.Can't be determined, need to know the proportions of each stock and their respective returns & risks
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