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Suppose that the stock market offers an expected rate of return of 20%, with a standard deviation of 13%. Gold has an expected rate of
Suppose that the stock market offers an expected rate of return of 20%, with a standard deviation of 13%. Gold has an expected rate of return of 18%, with a standard deviation of 16%. In view of the market's higher expected return and lower uncertainty, would anyone choose to hold gold in a portfolio and why? (Hint: the answer does not require you to do a lot of calculations)
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