You have a portfolio with a standard deviation of 23% and an expected return of 15%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have25% of your money in the new stock and 75% of your money in your existing portfolio, which one should you add?Stock AStock BExpectedReturn15%15%StandardDeviation24%20%Standard deviation of the portfolio with stock A isCorrelation withYour Portfolio's Returns0.20.6%. (Round to two decimal places.)%. (Round to two decimal places.)Standard deviation of the portfolio with stock B isWhich stock should you add and why? (Select the best choice below.)TextA. Add A because the portfolio is less risky when A is added.B. Add B because the portfolio is less risky when B is added.OC. Add either one because both portfolios are equally risky.Next

The overall risk for a collection of investments based on price volatility is known as the portfolio…

You have a portfolio with a standard deviation of 23% and an expected return of 15%. 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 Stock B Expected Return 15% 15% Standard Deviation 24% 20% Correlation with Your Portfolio's Returns 0.2 0.6 Text Standard deviation of the portfolio with stock A is %. (Round to two decimal places.) Standard deviation of the portfolio with stock B is %. (Round to two decimal places.) Which stock should you add and why? (Select the best choice below.) A. Add A because the portfolio is less risky when A is added. OB. Add B because the portfolio is less risky when B is added. O C. Add either one because both portfolios are equally risky. ...

You have a portfolio with a standard deviation of 23% and an expected return of 15%. 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 Stock B Expected Return 15% 15% Standard Deviation 24% 20% Correlation with Your Portfolio's Returns 0.2 0.6 Text Standard deviation of the portfolio with stock A is %. (Round to two decimal places.) Standard deviation of the portfolio with stock B is %. (Round to two decimal places.) Which stock should you add and why? (Select the best choice below.) A. Add A because the portfolio is less risky when A is added. OB. Add B because the portfolio is less risky when B is added. O C. Add either one because both portfolios are equally risky. ...

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

Problem 1PS

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You are considering three stocks—A, B, and C—for possible inclusion in your investment portfolio. Stock A has a beta of 0.80, stock B has a beta of 1.40, and stock C has a beta of -0.30. If the return on the market portfolio increased by 12%, what change would you expect in the return for each stock? If the return on the market portfolio decreased by 5%, what change would you expect in the return for each stock?
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