Your client has $104,000 invested in stock A. She would like to build a two-stock portfolio by investi in either stock B or C. She wants a portfolio with an expected return of at least 15.5% and as low a the standard deviation must be no more than 40%. What do you advise her to do, and what will be return and standard deviation? A B C Expected Return 17% 14% 14% Standard Deviation 45% 37% 37% The expected return of the portfolio with stock B is Correlation with A 1.00 0.18 0.33 %. (Round to one decimal place.)
Your client has $104,000 invested in stock A. She would like to build a two-stock portfolio by investi in either stock B or C. She wants a portfolio with an expected return of at least 15.5% and as low a the standard deviation must be no more than 40%. What do you advise her to do, and what will be return and standard deviation? A B C Expected Return 17% 14% 14% Standard Deviation 45% 37% 37% The expected return of the portfolio with stock B is Correlation with A 1.00 0.18 0.33 %. (Round to one decimal place.)
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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A 268.
Transcribed Image Text:Your client has $104,000 invested in stock A. She would like to build a two-stock portfolio by investing another $104,000
in either stock B or C. She wants a portfolio with an expected return of at least 15.5% 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 expecte
return and standard deviation?
A
B
Expected Return
17%
14%
14%
Standard Deviation
45%
37%
37%
The expected return of the portfolio with stock B is
Correlation with A
1.00
0.18
0.33
%. (Round to one decimal place.)
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