Stocks A, B, and C have the same expected return and standard deviation. The following...
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Stocks A, B, and C have the same expected return and standard deviation. The following table shows the correlations between the returns on these stocks.
|
| Stock A | Stock B | Stock C |
| Stock A | +1.0 |
|
|
| Stock B | +0.2 | +0.1 |
|
| Stock C | +0.0 | -0.2 | +1.0 |
Only on the basis of the information provided in the tables, which portfolio would you recommend from the following options? Justify your choice.
a) Equally invested in stocks A and B. d) Totally invested in stock A. b) Equally invested in stocks A and C. e) Totally invested in stock C. c) Equally invested in stocks B and C.
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