You have a portfolio with a standard deviation of

30 %30%

and an expected return of

18 %18%.

You are considering adding one of the two stocks in the following table. If after adding the stock you will have

20 %20%

of your money in the new stock and

80 %80%

of your money in your existing portfolio, which one should you add?

	Expected Return	Standard Deviation	Correlation with Your Portfolio's Returns
Stock A	1515%	2525%	0.20.2
Stock B	1515%	2020%	0.60.6

Standard deviation of the portfolio with stock A is

2525%.

(Round to two decimal places.)Standard deviation of the portfolio with stock B is

nothing%.

(Round to two decimal places.)

Which stock should you add and why?(Select the best choice below.)

A.

Add Upper A because the portfolio is less risky when Upper A is added.Add A because the portfolio is less risky when A is added.

B.

Add Upper B because the portfolio is less risky when Upper B is added.Add B because the portfolio is less risky when B is added.

C.

Add either one because both portfolios are equally risky.