Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please highlight answers You have a portfolio with a standard deviation of 22% and an expected return of 15%. You are considering adding one of

please highlight answers
image text in transcribed
You have a portfolio with a standard deviation of 22% and an expected return of 15%. 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 12% 12% Stock A Stock B Standard Deviation 22% 19% Correlation with Your Portfolio's Returns 0.3 0.5 Standard deviation of the portfolio with stock A is %. (Round to two decimal places.) Standard deviation of the portfolio with stock Bis%. (Round to two decimal places.) Which stock should you add and why? (Select the best choice below.) A. Add B because the portfolio is less risky when B is added. B. Add A because the portfolio is less risky when A is added C. Add either one because both portfolios are equally risky

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Computational Techniques In Economics And Finance

Authors: Constantin Zopounidis

1st Edition

1613245580, 978-1613245583

More Books

Students also viewed these Finance questions

Question

What social challenges are addressed by Tesla ( Elon Musk)

Answered: 1 week ago