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The correlation coefficients between pairs of stocks is as follows

The correlation coefficients between pairs of stocks is as follows:

Corr (A, B) = .85; Corr (A, C) = .60; Corr (A, D) =.45

Each stock has an expected return of 8 percent and a standard deviation of 20 percent. If you’re entire portfolio now comprises stock A and you can add only one more, which of the following would you choose, and why?

a. B

b. C

c. D

d. Need more data

Corr (A, B) = .85; Corr (A, C) = .60; Corr (A, D) =.45

Each stock has an expected return of 8 percent and a standard deviation of 20 percent. If you’re entire portfolio now comprises stock A and you can add only one more, which of the following would you choose, and why?

a. B

b. C

c. D

d. Need more data

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