Standard deviation of the portfolio with stock

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Reference no: EM131543398

You have a portfolio with a standard deviation of 29% and an expected return of 16%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 25% of your money in the new stock and 75% of your money in your existing? portfolio, which one should you? add?

Stock A:Expected Return 13% Standard Deviation 23% Correlation with Your? Portfolio's Returns 0.3

Stock B: Expected Return 13?% Standard Deviation 17?% Correlation with Your? Portfolio's Returns 0.7

1) Standard deviation of the portfolio with stock A is ___?%. ?(Round to two decimal? places.)

2) Standard deviation of the portfolio with stock B is ___%. ?(Round to two decimal? places.)

3) Which stock should you add and? why? ?(Select the best choice? below.)

A. Add Upper A because the portfolio is less risky when Upper A is added. Add A because the portfolio is less risky when A is added.

B. Add Upper B because the portfolio is less risky when Upper B is added. Add B because the portfolio is less risky when B is added.

C. Add either one because both portfolios are equally risky.

Reference no: EM131543398

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