Reference no: EM133073673

Brenda Weiss is a portfolio manager managing a portfolio worth $2,000,000. Being optimistic about the prospects of the stock market in the coming months, she has borrowed $500,000 at an interest rate of 8% (0.08), and has invested this money, togetherwith the $2,000,000 dollars that she has in two portfolios of risky securities. $1,000,000 have been invested in an S&P index fund, and the rest in a small stock fund. Brendaassesses that the expected return on the S&P fund is 13% (0.13) with standard deviation 20% (0.20), and that the expected return on the small stock fund is 18% (0.18) with astandard deviation of 25% (0.25). She also assesses the correlation coefficient between the S&P fund and the small stock fund to be 0.7. What is the expected return andstandard deviation of return on Brenda's portfolio?