Question

You have a portfolio with a standard deviation of

20 %20%

and an expected return of

16 %16%.

You are considering adding one of the two stocks in the following table. If after adding the stock you will have

25 %25%

of your money in the new stock and

75 %75%

of your money in your existing​ portfolio, which one should you​ add?

	Expected Return	Standard Deviation	Correlation with Your​ Portfolio's Returns
Stock A	1515​%	2626​%	0.40.4
Stock B	1515​%	1717​%	0.50.5

Answer 1