Your client has $100,000 invested in stock A. She would like to build a two-stock portfolio by investing another $100,000 in either stock B or C. She wants a portfolio with an expected return of at least 13.5% and a low a risk as possible, the standard deviation must be no more than 30%. What do you advise her to do (Rationalize your answer), and what will be the expected return and deviation of the recommended portfolio? (Please Show Calculations).
|Expected Return||Standard Deviation||Correlation With A|