Part 1

You have a portfolio with a standard deviation of

21% and an expected return of 20%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 30% of your money in the new stock and 70% of your money in your existing portfolio, which one should you add?

	Expected Return	Standard Deviation	Correlation with Your Portfolio's Returns
Stock A	16%	24%	0.2
Stock B	16%	16%	0.6

Question content area bottom

Part 1

Standard deviation of the portfolio with stock A is

(Round to two decimal places.)

Part 2

Standard deviation of the portfolio with stock B is

(Round to two decimal places.)

Part 3

Which stock should you add and why?(Select the best choice below.)

A.)Add Upper B because the portfolio is less risky when Upper B is added.

Add B because the portfolio is less risky when B is added.

B.)Add Upper A because the portfolio is less risky when Upper A is added.

Add A because the portfolio is less risky when A is added.

C.) Add either one because both portfolios are equally risky