Consider stock a with expected return ra and return, Financial Management

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Consider stock a with expected return ra and return

Consider stock A with expected return rA and return standard deviation sA, and stock B with expected return rB and return standard deviation sB. Assume the two stocks are perfectly positively correlated and that sA>sB or sA

A. xA=(sB/( sB- sA)); xB=(sA/( sA- sB))

B. xA=50%; xB=50%

C. xA=(sA/( sB- sA)); xB=(sB/( sB- sA))

D. None of the above as both stocks have risky returns.

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