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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 expected return =

The following statistics and estimates were compiled by FIN343 Bank regarding a proposed new branch office and the bank itself:

Branch office expected return = 17%

Standard deviation of branch return = 9%

Existing bank's expected return = 12%

Standard deviation of existing bank's return = 6%

Branch asset value as a percentage of total bank assets = 20%

Correlation of net cash flows for branch and bank as a whole = +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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