2. Suppose the expected return and standard deviation of stock A is 10% and 20% respectively. The expected return and standard deviation of stock B is 15% and 28% respectively. The correlation between A and B is 0.4.

A portfolio P consulting of only these two stocks has an expected return of 14%. What is the standard deviation of P?

a. 21.9%

b. 4.85%

C.

4.8%

d.

28.6%

3. Suppose the risk free in the market is 3%, the expected return of the market portfolio is

20%, and the standard deviation of the market portfolio return is 2%. The covariance of the return stock A and the market portfolio is 0.08. Based on CAPM, what is the expected return of stock A?

. 25%

b. 37.5% c. 25.62% d. 24.76%

can anyone help me solve these sums with detailed working