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

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Finance

You have a portfolio with a standard deviation of 30 % and anexpected return of 18 %. You are considering adding one of the twostocks in the following table. If after adding the stock you willhave 30 % of your money in the new stock and 70 % of your money inyour existing? portfolio, which one should you? add?
Expected Return Standard Deviation Correlation with Your Portfolio's Returns
Stock A 15% 23% 0.3
Stock B 15% 17% 0.6
Standard deviation of the portfolio with stock A is %? (Roundto two decimal places)
Standard deviation of the portfolio with stock B is %? (Roundto two decimal places)
Which stock would you add to your portfolio?

Answer & Explanation Solved by verified expert

4.3 Ratings (920 Votes)

As Adding both the stocks will give same Expected See Answer

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You have a portfolio with a standard deviation of 30 % and anexpected return of 18 %. You are considering adding one of the twostocks in the following table. If after adding the stock you willhave 30 % of your money in the new stock and 70 % of your money inyour existing? portfolio, which one should you? add?Expected ReturnStandard DeviationCorrelation with Your Portfolio's ReturnsStock A15%23%0.3Stock B15%17%0.6Standard deviation of the portfolio with stock A is __%? (Roundto two decimal places)Standard deviation of the portfolio with stock B is __%? (Roundto two decimal places)Which stock would you add to your portfolio?

	Expected Return	Standard Deviation	Correlation with Your Portfolio's Returns
Stock A	15%	23%	0.3
Stock B	15%	17%	0.6