Your client has $96,000 invested in stock A. She would like to build a two-stock...
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Your client has $96,000 invested in stock A. She would like to build a two-stock portfolio by investing another $96,000 in either stock B or C. She wants a portfolio with an expected return of at least 14.5% and as low a risk as possible, but the standard deviation must be no more than 40%. What do you advise her to do, and what will be the portfolio expected return and standard deviation? \begin{tabular}{cccc} & Expected Return & Standard Deviation & Correlation with A \\ \hline A & 17% & 47% & 1.00 \\ B & 12% & 35% & 0.15 \\ C & 12% & 35% & 0.35 \end{tabular}
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