28. An investor invests 30% of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of

0.04 and 70% in a T-bill that pays 6%. His portfolio's expected return and standard deviation are __________

and __________, respectively.

Answer Below:

E(r P) = 0.3(15%) + 0.7(6%) = 8.7%; sP = 0.3(0.04)^1/2 = 6%.

Question:

Could someone please explain why the sP formula is ^1/2? All the other formulas I have seen are ^2. What is happening here?

Please explain formula and also conceptually please!