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You have a portfolio with a standard deviation of 25% and an expected return of 20%. You are considering adding one of the two stocks
You have a portfolio with a standard deviation of 25% and an expected return of 20%. 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? Expected Return 15% 15% Standard Deviation 22% 19% Correlation with Your Portfolio's Returns 0.3 0.5 Stock A Stock B . Standard deviation of the portfolio with stock Ais 20.47%. (Round to two decimal places.) Standard deviation of the portfolio with stock Bis 20.94 %. (Round to two decimal places.) Which stock should you add and why? (Select the best choice below.) O A. Add B because the portfolio is less risky when B is added. OB. Add A because the portfolio is less risky when A is added. O C. Add either one because both portfolios are equally risky. You have a portfolio with a standard deviation of 25% and an expected return of 20%. 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? Expected Return 15% 15% Standard Deviation 22% 19% Correlation with Your Portfolio's Returns 0.3 0.5 Stock A Stock B . Standard deviation of the portfolio with stock Ais 20.47%. (Round to two decimal places.) Standard deviation of the portfolio with stock Bis 20.94 %. (Round to two decimal places.) Which stock should you add and why? (Select the best choice below.) O A. Add B because the portfolio is less risky when B is added. OB. Add A because the portfolio is less risky when A is added. O C. Add either one because both portfolios are equally risky
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