You have a portfolio with a standard deviation of 20% and an expected return of 17%. You are considering adding one of the two stocks in the following table. If after adding the stock you will have 20% of your money in the new stock and 80% of your money in your existing portfolio, which one should you add? Expected Standard Return Deviation Stock A Stock B 12% 12% 24% 19% Correlation with Your Portfolio's Returns 0.2 0.6 Standard deviation of the portfolio with stock A is %. (Round to two decimal places.)
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The formula for the standard deviation of a portfolio is: Ļp = ā(w1^2 * Ļ1^2 + w2^2 * Ļ2^2 + 2 * w1 * w2 * Ļ * Ļ1 * Ļ2) Where: - Ļp is the standard deviation of the portfolio - w1 and w2 are the weights of the stocks in the portfolio (in this case, 20% and 80% Show moreā¦
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