Description
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 | |
A | 15% | 40% | 1 |
B | 12% | 30% | 0.4 |
C | 12% | 30% | 0.5 |
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