Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have a portfolio with a standard deviation of 21% and an expected return of 19%. You are considering adding one of the two shares

image text in transcribed

You have a portfolio with a standard deviation of 21% and an expected return of 19%. You are considering adding one of the two shares in the table below. If after adding the shares you will have 30% of your money in the new shares and 70% of your money in your existing portfolio, which one should you add? Expected return 14% 14% Standard deviation 23% 17% Correlation with your portfolio's returns 0.4 0.6 Share A Share B Standard deviation of the portfolio with share A is 4%. (Round to two decimal places.) Standard deviation of the portfolio with share B is 4%. (Round to two decimal places.) Which share should you add and why? (Select the best choice below.) A. Add B because the portfolio is less risky when B is added. O B. Add A since the portfolio is less risky when A is added

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

Understanding Cryptocurrencies Bitcoin Ethereum And Altcoins As An Asset Class

Authors: Ariel Santos-alborna

1st Edition

1637420994, 978-1637420997

More Books

Students also viewed these Finance questions

Question

What is the difference? LO.1

Answered: 1 week ago