Question
Suppose Biovail and the Shoppers Drug Mart have expected returns and volatilities shown below, with a correlation of 21%. E [R] SD (R) Biovail 7.3%
Suppose Biovail and the Shoppers Drug Mart have expected returns and volatilities shown below, with a correlation of 21%. E [R] SD (R) Biovail 7.3% 15.1% Shoppers Drug Mart 10.7% 20.9% Assume the portfolio is equally invested in these two stocks. If the correlation between Biovail's and Shoppers Drug Mart's stock were to increase, a. Would the expected return of the portfolio rise or fall? b. Would the volatility of the portfolio rise or fall? a. Would the expected return of the portfolio rise or fall? (Select the best choice below.) A. Remain the same. B. Rise. C. Fall. D. Cannot tell from the information provided.
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