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You have a portfolio with a standard deviation of 30% and an expected return of 16%. You are considering adding one of the two stocks
You have a portfolio with a standard deviation of 30% and an expected return of 16%. 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 15% 15% Standard Deviation 26% 17% Correlation with Your Portfolio's Returns 0.4 0.6 Stock A Stock B Standard deviation of the portfolio with stock Ais %. (Round to two decimal places.) Standard deviation of the portfolio with stock Bis%. (Round to two decimal places.) Which stock should you add and why? (Select the best choice below.) O A. Add B because the portfolio is less risky when B is added. OB. Add A since the portfolio is less risky when A is added. O C. Add either one because both portfolios are equally risky. Screenshot
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