3.

(Computing the standard deviation for a portfolio of two risky investments) Mary Guilott recently graduated from Nichols State University and is anxious to begin investing her meager savings as a way of applying what she has learned in business school. Specifically, she is evaluating an investment in a portfolio comprised of two firms' common stock. She has collected the following information about the common stock of Firm A and Firm B: B. a. If Mary invests half her money in each of the two common stocks, what is the portfolio's expected rate of return and standard deviation in portfolio return? b. Answer part a where the correlation between the two common stock investments is equal to zero. c. Answer part a where the correlation between the two common stock investments is equal to + 1. d. Answer part a where the correlation between the two common stock investments is equal to - 1. e. Using your responses to questions ad, describe the relationship between the correlation and the risk and return of the portfolio. - Standard Deviation Expected Return 0.14 0.18 0.17 Firm A's common stock Firm B's common stock Correlation coefficient 0.24 0.40 (Click on the icon in order to copy its contents into a spreadsheet.)