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.)
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.)
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
Related questions
Question
I need the standard deviation of the portfolio with stock B please!
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.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 4 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education