HW3.dvi

Your client has invested $100, 000 in stock A. She would like to build a two-stock portfolio by investing another $100, 000 in either stock B or C. She wants a portfolio with an expected return of at least 14% and as low a risk as possible, but the standard deviation must be no more than 40%. What do you advise her to do, and what will be the portfolio expected return and standard deviation?

HW3.dvi

Expected Return Standard Deviation Correlation with A

A 15% 50% 1

1. B 13% 40% 0.2
2. C 13% 40% 0.3

PLEASE SHOW WORK STEP BY STEP