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Your client has $105,000 invested in stock A. She would like to build a two-stock portfolio by investing another $105,000 in either stock B or
Your client has $105,000 invested in stock A. She would like to build a two-stock portfolio by investing another $105,000 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? Expected Return 17% 12% 12% Standard Deviation 45% 40% 40% Correlation with A 1.00 0.16 0.28 B The expected return of the portfolio with stock B is %. (Round to one decimal place.) The expected return of the portfolio with stock C is %. (Round to one decimal place.) The standard deviation of the portfolio with stock B is %. (Round to one decimal place.) The standard deviation of the portfolio with stock C is %. (Round to one decimal place.) (Select from the drop-down menu.) You would advise your client to choose because it will produce the portfolio with the lower standard deviation
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