Question
You have a portfolio with a standard deviation of 28 % and an expected return of 18 %. You are considering adding one of the
You have a portfolio with a standard deviation of 28 % 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 25 % of your money in the new stock and 75 % of your money in your existing portfolio, which one should you add? Expected Return Standard Deviation Correlation with Your Portfolio's Returns Stock A 14% 21% 0.4 Stock B 14% 20% 0.6 Standard deviation of the portfolio with stock A is 23.60%. (Round to two decimal places.) Standard deviation of the portfolio with stock B is 24.33%. (Round to two decimal places.) Which stock should you add and why?(Select the best choice below.) A. Add Upper B because the portfolio is less risky when Upper B is added. B. Add Upper A because the portfolio is less risky when Upper A is added. Your answer is correct.C. Add either one because both portfolios are equally risky.
calculate by hand please
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