Suppose you have a portfolio of stocks with a beta of 1.5 and a standard deviation of
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Question:
Suppose you have a portfolio of stocks with a beta of 1.5 and a standard deviation of 18%. You want to add a new stock to your portfolio to reduce the overall portfolio risk. The new stock has a beta of 0.75 and a standard deviation of 12%. What percentage of your portfolio should be invested in the new stock to achieve a beta of 1.0 and reduce the portfolio's standard deviation to 15%?
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