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There are several possible scenarios for each of three stocks: Economy Stock A Stock B Stock C Up 8% Average 5% Down 0% 2% 3%
There are several possible scenarios for each of three stocks: Economy Stock A Stock B Stock C Up 8% Average 5% Down 0% 2% 3% 4% 12% 0% -5% If each state of the economy is equally likely, calculate the expected return and population standard deviation for a portfolio invested entirely in Stock A. Which stock should be added to the portfolio to reduce risk? expected return 4.33%; standard deviation -2.00%; add stock B expected return 5.00%; standard deviation 3.30%; add stock C O expected return 4.33%; standard deviation 3.30% ; add stock B O expected return 5.00%; standard deviation 2.00%; add stock C
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