Exhibit 714
Use the Information Below for the Following Problem(S)
Stocks

Multiple Choice

Exhibit 7.14
Use the Information Below for the Following Problem(S)
Stocks A and B have a correlation coefficient of -0.8. The stocks' expected returns and standard deviations are in the table below. A portfolio consisting of 40% of stock A and 60% of stock B is constructed.
$$\begin{array} { c c c } \text { Stack } & \text { Expected Return } & \text { Standard Devintion } \\\hline \text { A } & 20 \% & 25 \% \\B & 15 \% & 19 \%\end{array}$$
-Refer to Exhibit 7.14.What percentage of stock A should be invested to obtain the minimum risk portfolio that contains stock A and B?

A) 35%
B) 42%
C) 58%
D) 65%
E) 72%