2. What is the portfolio expected return and standard deviation? $4000 market value in stock A with E(RA) = 12% and $6000 market value in stock B with E(RB) = 9%. The standard deviations () and correlation () are: A = 25% B = 20% AB = 0.5

For a 2 stock portfolio,

2port = wA2 2A + wB2 2B + 2 wA wB AB A B

port = (wA2 2A + wB2 2B + 2 wA wB AB A B)^0.5