321.
315.1
1. The characteristics of 2 stocks are listed
in this table:
| |
Expected Return
|
Standard Deviation
|
Beta
|
| Stock A |
18%
|
20%
|
1.5
|
| Stock B |
10%
|
30%
|
1.1
|
- Stock A and Stock B have a 0.3 correlation
(r , or rho). What is the expected return and
standard deviation of a portfolio which is 50% Stock A
and 50% Stock B? (3 pts)
- If you have a well-diversified portfolio
of 20 stocks and you are considering adding EITHER Stock
A or Stock B to that portfolio, which one is a riskier
addition and WHY. (1 pt)
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