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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?

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