Calucate the expected return and standard deviation

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Reference no: EM1364711

Suppose the expected returns and standard deviations of stocks A and B are E(R)=0.15, E(R)=0.25, deviation is A=0.1,B=0.2 respectively.

A. Calucate the expected return and standard deviation of a portfolio that is composed of 40% A and 60% B when the correlation between the returns on A and B =-0.15

B. Calculate the standard deviation of a portfolio that is composed of 40% A & 60% B when the correlation coefficient between the returns on A and B is -0.15.

C. How does the correlation between the returns on A and B affect the standard deviation of the portfolio?

Reference no: EM1364711

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