In: Accounting
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.)