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Determine the standard deviation of your portfolio

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Problem - Consider the following two investment opportunities: a stock fund and a bond fund with E(rS)=0.20, σS=0.3, E(rB)=0.12, σB=0.15. The correlation coefficient between the two funds is 0.10. The risk free rate is 0.08. You know that the slope of the optimal capital allocation line is 0.460. If you require an expected rate of return of 0.29 on your investment on this optimal CAL, determine the standard deviation of your portfolio?

Reference no: EM132862493

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