Expected returns and standard deviations of stocks

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Suppose the expected returns and standard deviations of Stocks A and B are E(RA) = .097, E(RB) = .157, σA = .367, and σB = .627. a-1. Calculate the expected return of a portfolio that is composed of 42 percent Stock A and 58 percent Stock B when the correlation between the returns on A and B is .57. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Expected return % a-2. Calculate the standard deviation of a portfolio that is composed of 42 percent Stock A and 58 percent Stock B when the correlation between the returns on A and B is .57. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation % b. Calculate the standard deviation of a portfolio with the same portfolio weights as in part (a) when the correlation coefficient between the returns on Stocks A and B is −.57. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation %

Reference no: EM131451375

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