Consider the following stock return scenarios for three stocks:

Economy	Stock A	Stock B	Stock C
Up	20%	6%	25%
Average	12%	12%	15%
Down	10%	18%	-20%

If each state of the economy is equally likely, calculate the expected return and population standard deviation for a portfolio invested entirely in Stock A. Which stock should be added to the portfolio to reduce risk?

expected return 14.00%; standard deviation 6.00%; add stock B

expected return 12.00%; standard deviation 4.32%; add stock C

expected return 14.00%; standard deviation 4.32%; add stock B

expected return 12.00%; standard deviation 6.00%; add stock C