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The following statistics and estimates were compiled by FIN343 Bank regarding a proposed new branch office and the bank itself: Branch office expectedreturn= 17% Standard
The following statistics and estimates were compiled by FIN343 Bank regarding a proposed new branch office and the bank itself:
Branch office expectedreturn= 17%
Standard deviation of branch return= 9%
Existing bank's expectedreturn= 12%
Standard deviation of existing bank'sreturn= 6%
Branch asset value as a percentage of total bank assets= 20%
Correlation of net cash flows for branch and bank as awhole= +0.60
What will happen to FIN343's total expected return and overall risk if the proposed new branch project is adopted?
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