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Your client has $96,000 invested in stock A. She would like to build a two-stock portfolio by investing another $96,000 in either stock B
Your client has $96,000 invested in stock A. She would like to build a two-stock portfolio by investing another $96,000 in either stock B or C. She wants a portfolio with an expected return of at least 13.5% 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? ABC Expected Return 15% 12% 12% Standard Deviation 47% 38% 38% Correlation with A 1.00 0.14 0.35 The expected return of the portfolio with stock B is %. (Round to one decimal place.)
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