Compute the standard deviation of the returns on the portfo

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An investor holding a portfolio consisting of two stocks invests 25% of assets in stock A and 75% into Stock B. The return R(A) from Stock A has a mean of 4% and a standard deviation of 8%. Stock B has an expected return E[R(B)] with a standard deviation of 12%. The portfolio return is P = 0.25R(A) + 0.75R(B)

a) compute the expected return on portfoliob) compute the standard deviation of the returns on the portfolio assuming that the two stocks returns are perfectly positively correlatedc) compute the standard deviation of the returns on the portfolio assuming that the two stocks returns have a correlation of 0.5d)compute the standard deviation of the returns on the portfolio assuming that the two stocks returns are uncorrelated

Reference no: EM13293506

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