The expected returns and standard deviations for stocks A and B are r_A=14% and r_B=19%, respectively, and $\sigma$ _A=23% and $\sigma$ _B=34%, respectively.The correlation of the returns on the two stocks is $\sigma$ _AB=0.3.What is the expected return, r_P, and standard deviation, $\sigma$ _P, of a portfolio with weights of w_A=0.60 and w_B=0.40 in stocks A and B, respectively?
$\begin{array}{ll}&1' \mathrm{P} & \sigma_{\mathrm{P}} \\a.&16 \% & 22.1 \% \\b.&16 \% & 24.8 \% \\c.&17 \% & 22.1 \% \\d.&17 \% & 24.8 \%\end{array}$

Question

The expected returns and standard deviations for stocks A and B are r_A=14% and r_B=19%, respectively, and

\sigma

_A=23% and

\sigma

_B=34%, respectively.The correlation of the returns on the two stocks is

\sigma

_AB=0.3.What is the expected return, r_P, and standard deviation,

\sigma

_P, of a portfolio with weights of w_A=0.60 and w_B=0.40 in stocks A and B, respectively?

\begin{array}{ll}&1' \mathrm{P} & \sigma_{\mathrm{P}} \\a.&16 \% & 22.1 \% \\b.&16 \% & 24.8 \% \\c.&17 \% & 22.1 \% \\d.&17 \% & 24.8 \%\end{array}

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The Answer of The expected returns and standard deviations for stocks A and B are r_A=14% and r_B=19%, respectively, and $\sigma$_A=23% and $\sigma$_B=34%, respectively.The correlation of the returns on the two stocks is $\sigma$_AB=0.3.What is the expected return, r_P, and standard deviation, $\sigma$_P, of a portfolio with weights of w_A=0.60 and w_B=0.40 in stocks A and B, respectively? $\begin{array}{ll} &1' \mathrm{P} & \sigma_{\mathrm{P}} \ a.&16 \% & 22.1 \% \ b.&16 \% & 24.8 \% \ c.&17 \% & 22.1 \% \ d.&17 \% & 24.8 \% \end{array}$

The Expected Returns and Standard Deviations for Stocks a and B