8. Stocks A and B have the following returns (see for the data in Excel format):

a. What are the expected returns of the two stocks?

b. What are the standard deviations of the returns of the two stocks?

c. If their correlation is 0.46, what is the expected return and standard deviation of a portfolio of 70% stock A and 30% stock B?

Transcribed Image Text:

Stock A Stock B 123 0.10 0.06 0.07 0.02 0.15 0.05 4 -0.05 0.01 5 0.08 -0.02