You have a portfolio with a standard deviation of 23% and an expected return of 15%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 25% of your money in the new stock and 75% of your money in your existing portfolio, which one should you add? Stock A Stock B Expected Return 15% 15% Standard Deviation 24% 20% Correlation with Your Portfolio's Returns 0.2 0.6 Text Standard deviation of the portfolio with stock A is %. (Round to two decimal places.) Standard deviation of the portfolio with stock B is %. (Round to two decimal places.) Which stock should you add and why? (Select the best choice below.) A. Add A because the portfolio is less risky when A is added. OB. Add B because the portfolio is less risky when B is added. O C. Add either one because both portfolios are equally risky. ...
You have a portfolio with a standard deviation of 23% and an expected return of 15%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 25% of your money in the new stock and 75% of your money in your existing portfolio, which one should you add? Stock A Stock B Expected Return 15% 15% Standard Deviation 24% 20% Correlation with Your Portfolio's Returns 0.2 0.6 Text Standard deviation of the portfolio with stock A is %. (Round to two decimal places.) Standard deviation of the portfolio with stock B is %. (Round to two decimal places.) Which stock should you add and why? (Select the best choice below.) A. Add A because the portfolio is less risky when A is added. OB. Add B because the portfolio is less risky when B is added. O C. Add either one because both portfolios are equally risky. ...
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 25P
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