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John currently has a portfolio of shares giving a return of 20% with a risk of 10%. He is considering a new investment which gives

John currently has a portfolio of shares giving a return of 20% with a risk of 10%. He is considering a new investment which gives a return of 20% with a risk of 12%. The coefficient of correlation of the new investment with his existing portfolio is +0.2. The new investment will comprise 40% of his enlarged portfolio. Should he invest in the new investment?

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