Question: Corr ( A , B ) = 0 . 8 5 ;Corr ( A , C ) = 0 . 6 0 ;Corr ( A

Corr(A,B)=0.85;Corr(A,C)=0.60;Corr(A,D)=0.45. Each stock has an expected return of 8% and a standard deviation of 20%.
5
If your entire portfolio is now composed of stock A and you can add some of only one stock to your portfolio, would you choose:
a. B
b. C
c. D
d. need more data
Corr ( A , B ) = 0 . 8 5 ;Corr ( A , C ) = 0 . 6

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