You have a portfolio with a standard deviation of 21% and an expected return of 15%....

 

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You have a portfolio with a standard deviation of 21% 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 30% of your money in the new stock and 70% of your money in your existing portfolio, which one should you add? Expected Return Stock A Stock B 12% Standard Deviation 24% Correlation with Your Portfolio's Returns 0.2 12% 20% 0.5 Standard deviation of the portfolio with stock A is 0.18%. (Round to two decimal places.) You have a portfolio with a standard deviation of 21% 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 30% of your money in the new stock and 70% of your money in your existing portfolio, which one should you add? Expected Return Stock A Stock B 12% Standard Deviation 24% Correlation with Your Portfolio's Returns 0.2 12% 20% 0.5 Standard deviation of the portfolio with stock A is 0.18%. (Round to two decimal places.)

Answer rating: 100% (QA)

To determine which stock to add to the portfolio we need to calculate the new expected return and st... View the full answer