Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have a portfolio with a standard deviation of 2 9 % and an expected return of 1 7 % . You are considering adding

You have a portfolio with a standard deviation of 29% and an expected return of 17%. You are considering adding
one of the two stocks in the following table. If after adding the stock you will have 30% of your money in the new
stock and 70% of your money in your existing portfolio, which one should you add?
Standard deviation of the portfolio with stock A is %.(Round to two decimal places.)
Standard deviation of the portfolio with stock B is %.(Round to two decimal places.)
Which stock should you add and why? (Select the best choice below.)
A. Add A because the portfolio is less risky when A is added.
B. Add B because the portfolio is less risky when B is added.
C. Add either one because both portfolios are equally risky.
image text in transcribed

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_2

Step: 3

blur-text-image_3

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

The Bank Credit Analysis Handbook

Authors: Jonathan Golin, Philippe Delhaise

2nd Edition

0470821574, 978-0470821572

More Books

Students also viewed these Finance questions

Question

Brief the importance of span of control and its concepts.

Answered: 1 week ago

Question

What is meant by decentralisation?

Answered: 1 week ago