Which stock is the best choice if it will be mixed with the rest of the investor’s portfolio, currently composed solely of holdings in the market-index fund?

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Consider the following expectations for four stocks that could be added to your portfolio. Alpha Beta R-Square Tracking error Standard Deviation Information Ratio Sharpe Treynor Stock A 1.00% 1.2 0.665 11.8 23.1 0.085 0.355 6.833 Stock B 2.00% 0.8 0.481 20.6 27.9 0.097 0.244 8.500 Stock C 1.50% 1.1 0.3967 14.2 25.7 0.106 0.315 7.364 Stock D 2.25% 0.95 0.5862 16.4 24.16 0.137 0.329 8.368 Consider the following expectations for four stocks that could be added to your portfolio. Alpha Beta R-Square Tracking error Standard Deviation Information Ratio Sharpe Treynor Stock A 1.00% 1.2 0.665 11.8 23.1 0.085 0.355 6.833 Stock B 2.00% 0.8 0.481 20.6 27.9 0.097 0.244 8.500 Stock C 1.50% 1.1 0.3967 14.2 25.7 0.106 0.315 7.364 Stock D 2.25% 0.95 0.5862 16.4 24.16 0.137 0.329 8.368

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To determine the best choice when adding a stock to a portfolio with a marke... View the full answer