Author Question: Stocks A, B, and C all have an expected return of 12% and a standard deviation of 30%. Stocks A and ... (Read 72 times)

ega16 · **on:** Aug 7, 2023

Stocks A, B, and C all have an expected return of 12% and a standard deviation of 30%. Stocks A and C have returns that are independent of one another; that is, their correlation coefficient equals zero. Stocks A and B have returns that are negatively correlated with one another; that is, their correlation coefficient is less than 0. Portfolio AB is a portfolio with half of its money invested in Stock A and half in Stock B. Portfolio AC is a portfolio with half of its money invested in Stock A and half invested in Stock C. Which of the following statements is correct?

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Portfolio AB has a standard deviation that is less than 30%.

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Portfolio AC has a standard deviation that is greater than 30%.

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Portfolio AB has an expected return that is greater than 12%.

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Portfolio AC has an expected return that is less than 12%.

brunoanthony · **Reply #1 on:** Aug 7, 2023

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