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You have a portfolio with a standard deviation of 30 % and an expected return of 18 %. You are considering adding one of the
You have a portfolio with a standard deviation of 30 % 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 30 % of your money in the new stock and 70 % of your money in your existing portfolio, which one should you add?
Expected Return | Standard Deviation | Correlation with Your Portfolio's Returns | |
Stock A | 15% | 23% | 0.3 |
Stock B | 15% | 17% | 0.6 |
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 would you add to your portfolio?
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