Question

In: Accounting

You have a portfolio with a standard deviation of 30 %30% and an expected return of...

You have a portfolio with a standard deviation of

30 %30%

and an expected return of

17 %17%.

You are considering adding one of the two stocks in the following table. If after adding the stock you will have

20 %20%

of your money in the new stock and

80 %80%

of your money in your existing portfolio, which one should you add?

Expected

Return

Standard

Deviation

Correlation with

Your Portfolio's Returns

Stock A

1616 %

2121 %

0.20.2

Stock B

1616 %

1818 %

0.70.7

Standard deviation of the portfolio with stock A is

25.18 %.

(Round to two decimal places.)Standard deviation of the portfolio with stock B is

26.64 %.

(Round to two decimal places.)

Expert Solution

ekkarill92 answered 2 years ago

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