Business, 07.04.2020 19:52, Jcmandique4062

Stocks A, B, and C all have an expected return of 10% and a standard deviation of 25%. Stocks A and B have returns that are independent of one another, i. e., their correlation coefficient, r, equals zero. Stocks A and C have returns that are negatively correlated with one another, i. e., r 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?a. Portfolio AB has a standard deviation that is equal to 25%. b. Portfolio AC has a standard deviation that is less than 25%. c. Portfolio AB has a standard deviation that is greater than 25%. d. Portfolio AC has an expected return that is greater than 25%.

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Stocks A, B, and C all have an expected return of 10% and a standard deviation of 25%. Stocks A and...