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Based on the following information, Stock Weights St. Deviation Coeff. Correlation KO 73% 3% PEP (1 - weight of KO) 12% -0.27 WMT (1 -
Based on the following information,
Stock | Weights | St. Deviation | Coeff. Correlation |
KO | 73% | 3% | |
PEP | (1 - weight of KO) | 12% | -0.27 |
WMT | (1 - weight of KO) | 10% | 0.88 |
Currently, you are holding a portfolio comprised by KO and PEP shares (73% in KO). Your advisor suggests you should change to a portfolio comprised by KO and WMT instead (73% in KO). In this way, you would achieve a lower risk.
Do you accept this recommendation?
Type 0 as your solution if you do not accept (Your current portfolio has a lower risk than the new one)
Type 0.001 as your solution if you accept (The new portfolio would indeed result in a lower risk)
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