Calculate the standard deviation of the returns

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Suppose you invest equal amounts in a portfolio with an expected return of 16% and a standard deviation of returns of 20% and a risk-free asset with an interest rate of 4%; calculate the standard deviation of the returns on the resulting portfolio?

Std Deviation of a portfolio having a stock and a risk free security = Ws*SDs = 0.50 * 20% = 10% ## Ws = Weight of security SDs = Std deviation of security

WHERE IS THE "0.05" IN THE PREVIOUS EQUATION COMING FROM OR HOW IS THE "0.05" CALCULATED?

Reference no: EM132012842

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