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n either stock B or C. She wants a portfolio with an expected return of at least 13.5% and as low a risk as possible, out 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? A B C Expected Return 15% 12% 12% Standard Deviation 47% 40% 40% Correlation with A 1.00 0.16 0.31

n either stock B or C. She wants a portfolio with an expected return of at least 13.5% and as low a risk as possible, out 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? A B C Expected Return 15% 12% 12% Standard Deviation 47% 40% 40% Correlation with A 1.00 0.16 0.31

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Your client has $99,000 invested in stock A. She would like to build a two-stock portfolio by investing another $99,000 in either stock B or C. She wants a portfolio with an expected return of at least 13.5% 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 A B с 15% 12% 12% Standard Deviation 47% 40% 40% Correlation with A 1.00 0.16 0.31
Transcribed Image Text:Your client has $99,000 invested in stock A. She would like to build a two-stock portfolio by investing another $99,000 in either stock B or C. She wants a portfolio with an expected return of at least 13.5% 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 A B с 15% 12% 12% Standard Deviation 47% 40% 40% Correlation with A 1.00 0.16 0.31
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