Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You have a portfolio with a standard deviation of 20%and an expected return of 17%. You are considering adding one of the two stocks in
You have a portfolio with a standard deviation of 20%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 20%of your money in the new stock and 80%of your money in your existingportfolio, which one should youadd?
Expected Return | Standard Deviation | Correlation with YourPortfolio's Returns | |
Stock A | 12% | 24% | 0.4 |
Stock B | 12% | 18% | 0.5 |
Standard deviation of the portfolio with stock A is ____.(Round to two decimalplaces)
Standard deviation of the portfolio with stock B is ____.(Round to two decimalplaces)
Which stock should you add and why?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started