Your client has

$ 104 comma 000$104,000

invested in stock A. She would like to build a two-stock portfolio by investing another

$ 104 comma 000$104,000

in either stock B or C. She wants a portfolio with an expected return of at least

14.0 %14.0%

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?

	Expected Return	Standard Deviation	Correlation with A
A	15%	49%	1.00
B	13%	38%	0.15
C	1313%	38%	0.33

The expected return of the portfolio with stock B is

nothing%.

(Round to one decimal place.)The expected return of the portfolio with stock C is

nothing%.

(Round to one decimal place.)The standard deviation of the portfolio with stock B is

nothing%.

(Round to one decimal place.)The standard deviation of the portfolio with stock C is

nothing%.

(Round to one decimal place.)

(Select from the drop-down menu.)

You would advise your client to choose

stock B

stock C

because it will produce the portfolio with the lower standard deviation.