Question
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) The expected return of the portfolio with stock B is _____% (round to 2 decimal places)
b) The variance of the portfolio with stock B is ____ (keep all decimal places)
c) The variance of the portfolio with stock C is _____ (keep all decimal places)
d) The standard deviation of the portfolio with stock B is ____ (keep all decimal places)
e) The standard deviation of the portfolio with stock C is ____ (keep all decimal places)
(****Please ensure rounding is done correctly as well as being the correct answer, third time posting this question please only answer if you are sure its correct, thankyou)
\begin{tabular}{cccc} & Expected Return & Standard Deviation & Correlation with A \\ \hline A & 15% & 50% & 1.00 \\ B & 14% & 35% & 0.13 \\ C & 14% & 35% & 0.26 \end{tabular}Step by Step Solution
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