1. Your portfolio is made up of currency investment projects that have a 24% deviation and an annual return of 16.2%. Your average cost of capital is 9.75% You are considering adding only one of the two following projects, which will then constitute 20% of your entire portfolio.

These projects are as follows:

Project X has an expected return of 18.6%, a deviation of 22.72% and a correlation of .17 with the current portfolio.

Project Z has a correlation of .09 with an average annual return of 19.32% and a standard deviation of 30.4%.

Which one of these projects will you add to your portfolio? Make your selection based on the lowest standard deviation. Please be sure to provide the average return and the portfolio deviation of each possible combination. (Hint: Be sure to carry out your calculations to at least 5 places to the right of the decimal for accuracy throughout the calculation process.)