Your client has $98,000 invested in stock A. She would like to build a two-stock portfolio by investing another $98,000 in either stock B or C. She wants a portfolio with an expected return of at least 14.0% and as low a risk as possible, but the standard deviation must be no more than 40%. What do you advise her to do, and what will be the portfolio expected return and standard deviation?

	Expected Return	Standard Deviation	Correlation with A
A	15%	49%	1.00
B	13%	38%	0.12
C	13%	38%	0.28

The expected return of the portfolio with stock B is ?%.

Answer rating: 100% (QA)

If Invested in Stock B Expected return of A R A 15 Expected return of B R B 13 Standard Deviation of ... View the full answer