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Stocks A and B each have an expected return of 19%, a standard deviation of 25%, and a beta of 1.6. ...

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Stocks A and B each have an expected return of 19%, a standard deviation of 25%, and a beta of 1.6. ...

Stocks A and B each have an expected return of 19%, a standard deviation of 25%, and a beta of 1.6. The returns on the two stocks have a correlation coefficient of +0.8. You have a portfolio that consists of 50% A and 50% B. Which of the following statements is correct regarding this portfolio?

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its beta is less than 1.6

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its expected return is less than 19%

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its beta is 1.6

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its standard deviation is greater than 25%

Textbook

Financial Management: Theory and Practice

Edition: 4^th

Authors: Brigham, Ehrhardt, Gessaroli, Nason

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