Your client has $ 97,000 invested in stock A. She would like to build a...
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Your client has $ 97,000 invested in stock A. She would like to build a two-stock portfolio by investing another $ 97,000 in either stock B or C. She wants a portfolio with an expected return of at least 15.0 % 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.
| Stock Letter | Expected Return | Standard Deviation | Correlation With A |
| A | 17% | 45% | 1.00 |
| B | 13% | 36% | 0.17 |
| C | 13% | 36% | 0.33 |
1) The expected return of the portfolio with stock B is --%
2) The expected return of the portfolio with stock C
3) The standard deviation of Stock B?
4) The standard deviation of Stock C?
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