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In: Finance

You have a portfolio with a standard deviation of 26% and an expected return of 15%....

You have a portfolio with a standard deviation of 26% and an expected return of 15%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 30% of your money in the new stock and 70% of your money in your existing​ portfolio, which one should you​ add?

Expected

Return

Standard

Deviation

Correlation with

Your​ Portfolio's Returns

Stock A

15​%

25​%

0.2

Stock B

15​%

19​%

0.6

Standard deviation of the portfolio with stock A is _%?

Standard deviation of the portfolio with stock B is _%?

Solutions

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 7 months ago
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