Question 14 (1 point)

Stocks A, B, and C all have an expected return of 10% and a standard deviation of 25%. Stocks A and B have returns that are INDEPENDENT of one another, i.e., their correlation coefficient, r, equals zero. Stocks A and C have returns that areNEGATIVELY CORRELATED with one another, i.e., r is less than 0. Portfolio AB is a portfolio with half of its money invested in Stock A and half in Stock B. Portfolio AC is a portfolio with half of its money invested in Stock A and half invested in Stock C. Which of the following statements is correct?

Question 14 options:

	Portfolio AB has a standard deviation that is equal to 25%.
	Portfolio AC has a standard deviation that is less than 25%.
	Portfolio AB has a standard deviation that is greater than 25%.
	Portfolio AC has an expected return that is greater than 25%.