50.Suppose you borrow at the risk-free rate an amount equal to your initial wealth and invest ina stock with an expected return of 20% and a standard deviation of returns of 16%. The risk-freeasset has an interest rate of 4%; calculate standard deviation of the resulting portfolio:A)28%B)40%C)32%D)none of the aboveAnswer: C Page: 187 [Denoting stock as sec1and risk free asset as sec2, using the formulafor the variance of returns on a 2-security portfolio, and observing that2=12=0, we get,p=x1*1=2*16% =32%] why X1 is 2