Your client has $105,000 invested in stock A. She would like to build a two-stock portfolio by investing another $105,000 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 expected return and standard deviation? ABC Expected Return 17% 14% 14% Standard Deviation 47% 36% 36% Correlation with A 1.00 0.13 0.27 The expected return of the portfolio with stock B is 15.5 %. (Round to one decimal place.) The expected return of the portfolio with stock C is 15.5 %. (Round to one decimal place.) The standard deviation of the portfolio with stock B is 36.7%. (Round to one decimal place.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
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I need the standard deviation of the portfolio with stock B please!

Your client has $105,000 invested in stock A. She would like to build a two-stock portfolio by investing another $105,000 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 expected return and standard deviation?
ABC
Expected Return
17%
14%
14%
Standard Deviation
47%
36%
36%
Correlation with A
1.00
0.13
0.27
The expected return of the portfolio with stock B is 15.5 %. (Round to one decimal place.)
The expected return of the portfolio with stock C is 15.5 %. (Round to one decimal place.)
The standard deviation of the portfolio with stock B is 36.7%. (Round to one decimal place.)
Transcribed Image Text:Your client has $105,000 invested in stock A. She would like to build a two-stock portfolio by investing another $105,000 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 expected return and standard deviation? ABC Expected Return 17% 14% 14% Standard Deviation 47% 36% 36% Correlation with A 1.00 0.13 0.27 The expected return of the portfolio with stock B is 15.5 %. (Round to one decimal place.) The expected return of the portfolio with stock C is 15.5 %. (Round to one decimal place.) The standard deviation of the portfolio with stock B is 36.7%. (Round to one decimal place.)
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