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Suppose Target's stock has an expected return of 18% and a volatility of 41%, Hershey's stock has an expected return of 11% and a volatility

image text in transcribed Suppose Target's stock has an expected return of 18% and a volatility of 41%, Hershey's stock has an expected return of 11% and a volatility of 23%, and these two stocks are uncorrelated. a. What is the expected return and volatility of an equally weighted portfolio of the two stocks? Consider a new stock with an expected return of 14.5% and a volatility of 31%. Suppose this new stock is uncorrelated with Target's and Hershey's stock. b. Is holding this stock alone attractive compared to holding the portfolio in (a)? c. Can you improve upon your portfolio in (a) by adding this new stock to your portfolio? Explain

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