Part 1

You have a portfolio with a standard deviation of 25% and an expected return of 16%.

You are considering adding one of the two stocks in the following table. If after adding the stock you will have 25% of your money in the new stock and 75% 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%	20%	.5%

1) Standard deviation of the portfolio with stock A is

2)Standard deviation of the portfolio with stock B is