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8. Your client has $102,000 invested in stock A. She would like to build a two-stock portfolio by investing another $102,000 in either stock B
8. Your client has $102,000 invested in stock A. She would like to build a two-stock portfolio by investing another $102,000 in either stock B or C. She wants a portfolio with an expected return of at least 15.0% and as low a risk as possible, but the standard deviation must be no more than 40%. What do you advise her to do, and what will be the portfolio expected return and standard deviation? Expected Return Standard Deviation Correlation with A A 16% 47% 1.00 B 14% 37% 0.13 14% 37% 0.31 %. (Round to one decimal place.) The expected return of the portfolio with stock Bis The expected return of the portfolio with stock C is The standard deviation of the portfolio with stock Bis The standard deviation of the portfolio with stock C is (Select from the drop-down menu.) %. (Round to one decimal place.) %. (Round to one decimal place.) _%. (Round to one decimal place.) You would advise your client to choose (1) because it will produce the portfolio with the lower standard deviation. (1) O stock B stock C
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