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3. Consider the following information for stocks A and B. Expected return on Stock A = 18%. Expected return on Stock B = 23%. Correlation

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3. Consider the following information for stocks A and B. Expected return on Stock A = 18%. Expected return on Stock B = 23%. Correlation between returns of Stock A and Stock B = 0.10. Standard deviation of returns on Stock A = 40%. Standard deviation of returns on Stock B = 50%. Calculate the expected return and standard deviation of an equally weighted portfolio of stocks A and B. (6 marks)

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