The correlation of returns between the two stocks

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1. Stock A has expected return of 12% and standard deviation of 18%. Stock B has expected return of 7% and standard deviation of 6%. The correlation of returns between the two stocks is 0.45. You have put all of your money into these two stocks.

Graph your expected return, and the standard deviation of your returns, as a function of your investment weight in A (w) as w runs from -2 to 2. So you want a graph with expected return on the y-axis and standard deviation on the x-axis.

Reference no: EM131814754

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