Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jeff Madura

6th Edition

0134082915, 9780134082912

More Books

Students also viewed these Finance questions

Question

Subjective norms, i.e. the norms of the target group

Answered: 1 week ago