What is the expected return on the mutual fund

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Consider the following capital market: a risk-free asset yielding 0.75% per year and a mutual fund consisting of 70% stocks and 30% bonds. The expected return on stocks is 10.75% per year and the expected return on bonds is 3.25% per year. The standard deviation of stock returns is 30.00% and the standard deviation of bond returns 8.75%. The stock, bond and risk-free returns are all uncorrelated.

What is the expected return on the mutual fund? What is the standard deviation of returns for the mutual fund?

Reference no: EM13674122

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