Your client has $103,000 invested in stock A. She would like to build a two-stock portfolio by investing another $103,000 in either stock B or C. She wants a portfolio with an expected return of at least 14.5% 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? A B C Expected Return 17% 12% 12% Standard Deviation 47% 38% 38% Correlation with A 1.00 0.15 0.32
Your client has $103,000 invested in stock A. She would like to build a two-stock portfolio by investing another $103,000 in either stock B or C. She wants a portfolio with an expected return of at least 14.5% 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? A B C Expected Return 17% 12% 12% Standard Deviation 47% 38% 38% Correlation with A 1.00 0.15 0.32
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 6MC
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Calculate the standard deviation of stocks B&C
![Your client has $103,000 invested in stock A. She would like to build a two-stock portfolio by investing another $103,000 in either stock B or C. She wants a portfolio with an expected
return of at least 14.5% 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?
A
B
с
Expected Return
17%
12%
12%
Standard Deviation
47%
38%
38%
Correlation with A
1.00
0.15
0.32](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F699cdd6a-d9e2-46d1-8446-da1f856313fd%2F75b6e656-fb15-4198-9a07-896f7ec4ab14%2Fodfy58i_processed.png&w=3840&q=75)
Transcribed Image Text:Your client has $103,000 invested in stock A. She would like to build a two-stock portfolio by investing another $103,000 in either stock B or C. She wants a portfolio with an expected
return of at least 14.5% 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?
A
B
с
Expected Return
17%
12%
12%
Standard Deviation
47%
38%
38%
Correlation with A
1.00
0.15
0.32
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