Homework:Chapter 12: Systematic Risk and the Equity Risk Pr

Question 9, P 12-18 (similar to)

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You have a portfolio with a standard deviation of

28%

and an expected return of

20%.

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?

	Expected Return	Standard Deviation	Correlation with Your Portfolio's Returns
Stock A	13%	24%	0.3
Stock B	13%	19%	0.7

Standard deviation of the portfolio with stock A is

enter your response here%.

(Round to two decimal places.)