Standard Dev of Portfolio with Stock A:

Standard Dev of Portfolio with Stock B:

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 21% 16% Correlation with Your Portfolio's Returns 0.3 0.7 14% Stock A Stock B 14%