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Your client has $103,000 invested in stock A. She would like to build a two-stock portfolio by investing another $103,000 in either stock B or
Your client has $103,000 invested in stock A. She would like to build a two-stock portfolio by investing another $103,000 in either stock B or C. She wants a portfolio with an expected return of at least 14.5% and as low a risk as possible, but the standard deviation must be no more than 40%. What do you advise her to do, and what will be the portfolio expected return and standard deviation? A B C Expected Return 15% 14% 14% Standard Deviation 45% 37% 37% Correlation with A 1.00 0.16 0.33 The expected return of the portfolio with stock B is 14.5 %. (Round to one decimal place.) The expected return of the portfolio with stock C is 14.5 %. (Round to one decimal place.) The standard deviation of the portfolio with stock B is 31.3 %. (Round to one decimal place.) The standard deviation of the portfolio with stock C is %. (Round to one decimal place.)
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