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What are the expected return and standard deviation

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Question - The Bank of Tinytown has two $50,000 loans that have the following characteristics: Loan A has an expected return of 12 percent and a standard deviation of returns of 15 percent. The expected return and standard deviation of returns for loan B are 8 percent and 12 percent, respectively.

a) If the correlation coefficient between loans A and B is 0.10, what are the expected return and standard deviation of this portfolio?

b) What is the standard deviation of the portfolio if the correlation is -0.35?

Reference no: EM133070674

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