1. a. The standard deviation of stock A is .60, while the standard deviation of stock B is .80. If the correlation coefficient for A and B is negative, then a portfolio that consists of 20% of stock A and 80% of stock B MUST have a standard deviation _________. Assume no short selling allowed.

b. Assume that a potential project has a 50% chance of doubling your initial investment in a year and a 50% chance of losing all your investment in a year. What is the standard deviation of the rate of return on this investment?