Question: You want to diversify your portfolio by adding an additional stock. You are considering five stocks that have the same expected return of 12% and

You want to diversify your portfolio by adding an additional stock. You are considering five stocks that have the same expected return of 12% and the same standard deviation of 15% but different correlation coefficients with your existing portfolio. You should select the stock with which correlation coefficient in the following to come up with the least risky portfolio at the end? (No calculation is needed)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Question 10 (1 point) You want to diversify your portfolio by adding an additional stock. You are considering five stocks that have the same expected return of 10% and the same standard deviation of...

You want to diversify your portfolio by adding an additional stock. You are considering five stocks that have the same expected return of 11% and the same standard deviation of 15% but different...

Listen You want to diversify your portfolio by adding an additional stock. considering five stocks that have the same expected return of 1 2 % standard deviation of 1 5 % but different correlation...

Pretend you have $ 1 , 0 0 0 , 0 0 0 in cash now and you want this portfolio to grow to $ 3 , 5 0 0 , 0 0 0 in 2 0 years so you can purchase a beach house. Additionally, you are hoping to earn $ 3 0...

i need to find 1: portfolio invested in the stock 2: portfolio invested in the bond 3: expected return 4: standard deviation A pension fund manager is considering three mutual funds. The first is a...

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that...

A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a long- term government and corporate bond fund, and the third is a T-bill money market fund that...

13.( 1 pt) For each of the following situations, indicate whether ANOVA is appropriate; if not appropriate, the reason why not; and, if appropriate, the type of ANOVA that would be used (i.e.,...

Which of the following conclusions would be true if you earn a higher rate of return on your investments? a. The greater the present value would be for any lump sum you would receive in the future....

Kindly provide answers for all the questions in the attached document. BFF2140 INDIVIDUAL ASSIGNMENT Due date: Friday 13 May, 2016 by 6:00 pm Submission: via hard copy in allocated submission box,...

Choose a consumer products Company such as Procter & Gamble, Unilever, or Colgate. Visit that company's Web site. What strategy or strategies does the firm employ for reaching its target markets?...

1) If both panics are mistaken about a material fact, the mutual mistake does not void the contract. 2) For fraudulent misrepresentation to be the basis for a contract rescission, the statement of...

The sale of new securities by corporations takes place in the q , tertiary market primary market secondary market

5. Develop a scenario comparing two PH programs and involving the use of a CBA.

1. Which position would you take?

4. Is your choice different from that which you would recommend to Laura?

3. How does this fit with your preferences, career anchors, and values?