1) The following Stock estimates are provided Stock A has 14.5% Expected return with 0.965 Beta and standard deviation of 0.2875 whereas Stock B has 19.65% Expected Return with 1.435 Beta and standard deviation of 0.45 if the market index is 23.4% and rf is 8.7%.

a) Define the Standard deviations of both Stock A & B.

b) If the stocks are constructed with equal weights including 20% devoted to risk free investment Define the portfolio expected return, Standard deviation, beta and nonsystematic standard deviation.