1. Assume Grace keeps the ABC stock, calculate the:
   1. Expected return of her new portfolio, which includes ABC stock
   2. Covariance of ABC stock returns with the original portfolio returns
   3. Standard deviation of her new portfolio, which includes ABC stock

Abigail Grace has a $900,000 fully diversified portfolio. She subsequently inherits ABC Company common stock worth $100,000. Her financial adviser provided her with the following estimates: Original Portfolio ABC Company Expected Return 0.67% 1.25% Standard Deviation 2.37% 2.95% The correlation coefficient of ABC stock returns with the original portfolio return is 0.4