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The following data are for Problems 1 7 through 1 9 : The correlation coefficients between several pairs of stocks are as follows: Corr (

The following data are for Problems 17 through 19: The correlation coefficients between several pairs of stocks are as follows: Corr (A,B)=.85; Corr(A,C)=.60;Corr(A,D)=.45. Each stock has an expected return of 8% and a standard deviation of 20%.
17. If your entire portfolio is now composed of stock A and you can add some of only one stock to your portfolio, would you choose (explain your choice)
a. B
b. C
c. D
d. Need more data
18. Would the answer to Problem 17 change for more risk-averse or risk-tolerant investors? Explain.
19. Suppose that in addition to investing in one more stock you can invest in T-bills as well. Would you change your answers to Problems 17 and 18 if the T-bill rate is 8%?
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