Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have a portfolio with a standard deviation of 30% and an expected return of 20%. You are considering adding one of the two stocks

image text in transcribed

You have a portfolio with a standard deviation of 30% 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 20% of your money in the new stock and 80% of your money in your existing portfolio, which one should you add? Expected Standard Correlation with Your Portfolio's Returns Return Deviation 12% 24% 12% 16% Stock A Stock B 0.2 0.7 Standard deviation of the portfolio with stock A is 18.4%. (Round to two decimal places.)

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

The Handbook Of Financial Modeling

Authors: Jack Avon

1st Edition

1430262052, 978-1430262053

More Books

Students also viewed these Finance questions