You have a portfolio with a standard deviation of 24% and an expected return of 19%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 30% of your money in the new stock and 70% of your money in your existing portfolio, which one should you add? Standard deviation of portfolio with stock A is ? Expected Return Standard Deviation Correlation with Your Portfolio's Returns Stock A 12 % 22 % 0.2 Stock B 12 % 17 % 0.7
You have a portfolio with a standard deviation of 24% and an expected return of 19%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 30% of your money in the new stock and 70% of your money in your existing portfolio, which one should you add? Standard deviation of portfolio with stock A is ? Expected Return Standard Deviation Correlation with Your Portfolio's Returns Stock A 12 % 22 % 0.2 Stock B 12 % 17 % 0.7
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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Question
You have a portfolio with a standard deviation of 24% and an expected return of 19%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 30% of your money in the new stock and 70% of your money in your existing portfolio, which one should you add? Standard deviation of portfolio with stock A is ?
|
|
Expected
Return
|
Standard
Deviation
|
Correlation with
Your Portfolio's Returns
|
|
Stock A
|
12
%
|
22
%
|
0.2
|
|
Stock B
|
12
%
|
17
%
|
0.7
|
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