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The following statistics and estimates were compiled by FIN343 Bank regarding a proposed new branch office...

The following statistics and estimates were compiled by FIN343 Bank regarding a proposed new branch office and the bank itself:

                        Branch office expected return                                                             = 17%

                        Standard deviation of branch return                                                    = 9%

                        Existing bank's expected return                                                          = 12%

                        Standard deviation of existing bank's return                                      = 6%

                        Branch asset value as a percentage of total bank assets                      = 20%

                        Correlation of net cash flows for branch and bank as a whole                = +0.60

What will happen to FIN343's total expected return and overall risk if the proposed new branch project is adopted?

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