Statistics for three stocks, A, B and C, are shown in the following tables:

Only on the basis of the information provided in the tables, and given a choice between a portfolio made up of equal amounts of stocks A and B or a portfolio made up of equal amounts of stocks B and C, which portfolio would you recommend? Justify your choice.

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Standard Deviation of Returns Stock A Standard Deviation (%) 40 Correlations of Returns Stock A ED B C A 1.00 B 20 B 0.90 1.00 с 40 C 0.50 0.10 1.00 Standard Deviation of Returns Stock A Standard Deviation (%) 40 Correlations of Returns Stock A ED B C A 1.00 B 20 B 0.90 1.00 с 40 C 0.50 0.10 1.00

Answer rating: 100% (QA)

Portfolio and Diversification of Risk Portfolio is a group of different stocks bonds and cash equivalents Portfolio is formulated for the purpose of investment A portfolio can be of shares it can be o... View the full answer