Your client has $97,000 invested in stock A. She would like to build a two-stock portfolio by investing another $97,000 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? Expected Return Standard Correlation with A 15% 1.00 14% 0.15 0.35 14% A B C Deviation 49% 35% 35% The expected return of the portfolio with stock B is %. (Round to one decimal place.)
Your client has $97,000 invested in stock A. She would like to build a two-stock portfolio by investing another $97,000 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? Expected Return Standard Correlation with A 15% 1.00 14% 0.15 0.35 14% A B C Deviation 49% 35% 35% The expected return of the portfolio with stock B is %. (Round to one decimal place.)
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 5P
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