Mutual fund with an expected return

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You own a mutual fund with an expected return of 10% per year and a standard deviation of returns of 12% per year. You are considering adding another stock to your portfolio. The new stock has an expected return of 10% per year and a standard deviation of returns of 20% per year. The correlation of returns between the new stock and the existing mutual fund is positive, but low. What can we conclude about adding the new stock?

Reference no: EM13945271

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