Your bank is planning to acquire a stock brokrerage firm.

Given the following information please decide between adding or not adding this service. Your criteria are the acquired service should increase returns and reduce risk for the bank,

Given the following information please select the right answer.

Expected return: Brokerage operation	12.00%
Expected return: Existing services	10.00%
Standard Deviation: New services	8.00%
Standard Deviation: Existing services	5.00%
Correlation coefficient with other services	0.70
% of total net revenues: Brokerage office	16.00%
% of total net revenues : Existing services	84.00%

		Estimated Combined Return = 10.80% Estimated Combined Standard Deviation = 4.93% Acquire
		Estimated Combined Return = 10.80% Estimated Combined Standard Deviation = 5.18% Do not Acquire
		Estimated Combined Return = 10.32% Estimated Combined Standard Deviation = 4.93% Acquire
		Estimated Combined Return = 10.32% Estimated Combined Standard Deviation = 5.18% Do Not Acquire