Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have a portfolio with a standard deviation of 25 % and an expected return of 15 %. You are considering adding one of the

You have a portfolio with a standard deviation of 25 % and an expected return of 15 %. 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 existing portfolio, which one should you add?

Expected Return Standard Deviation Correlation w/ Portfolio's returns
Stock A 14% 22% 0.3
Stock B 14% 16% 0.5%

1. Standard deviation of the portfolio with stock A is____ 2. Standard deviation of the portfolio with stock B is ____ 3. Which stock would you add to your portfolio?

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

Crypto Asset Investing In The Age Of Autonomy

Authors: Jake Ryan

1st Edition

1119705363, 978-1119705369

More Books

Students also viewed these Finance questions