An investor constructs a portfolio with a 75 percent allocation to a stock index and a 25 percent allocation to a risk-free asset. The expected returns on the risk-free asset and the stock index are 3 percent and 10 percent, respectively. The standard deviation of returns on the stock index is 14 percent. Calculate the expected standard deviation of the portfolio.
A) 7.5 percent
B) 9.0 percent
C) 10.5 percent
D) 11.5 percent
E) 13.0 percent

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The Answer of An investor constructs a portfolio with a 75 percent allocation to a stock index and a 25 percent allocation to a risk-free asset. The expected returns on the risk-free asset and the stock index are 3 percent and 10 percent, respectively. The standard deviation of returns on the stock index is 14 percent. Calculate the expected standard deviation of the portfolio.
A) 7.5 percent
B) 9.0 percent
C) 10.5 percent
D) 11.5 percent
E) 13.0 percent

An Investor Constructs a Portfolio with a 75 Percent Allocation