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You have a portfolio with a standard deviation of 27% and an expected return of 18%. You are considering adding one of the two stocks
You have a portfolio with a standard deviation of 27% and an expected return of 18%. 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 16% 16% Standard Deviation 21% 19% Correlation with Your Portfolio's Returns 0.2 0.6 Stock A Stock B Standard deviation of the portfolio with stock A is %. (Round to two decimal places.) Standard deviation of the portfolio with stock B is %. (Round to two decimal places.) Which stock 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 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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