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You have a portfolio with a standard deviation of 20% and an expected return of 16%. You are considering adding one of the two stocks
You have a portfolio with a standard deviation of 20% and an expected return of 16%. 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 Expected Return 16% 16% Correlation with Your Portfolio's Returns 0.2 0.6 Stock A Stock B 23% 16% Standard deviation of the portfolio with stock A is %. (Round to two decimal places.) Your client has $96,000 invested in stock A. She would like to build a two-stock portfolio by investing another $96,000 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? A Expected Return 16% 14% 14% Standard Deviation 47% 38% 38% Correlation with A 1.00 0.15 0.26 B ..... The expected return of the portfolio with stock B is %. (Round to one decimal place.)
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