Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have a portfolio with a standard deviation of 22% 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 22% 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? Correlation with your portfolio's returns Expected Standard return deviation 13% 22% 17% Share A Share B 0.3 0.7 13% Standard deviation of the portfolio with share A is %. (Round to two decimal places.) Standard deviation of the portfolio with share B is %. (Round to two decimal places.) Which share should you add and why? (Select the best choice below.) O A. Add A because the portfolio is less risky when A is added. O B. Add B because the portfolio is less risky when B 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

Fundamentals Of Futures And Options Markets

Authors: Jonn C. Hull

8th International Edition

0133382850, 9780133382853

More Books

Students also viewed these Finance questions