A portfolio consists of Stock A and Stock B. Data for the 2 stocks is shown below

Stock A: Expected Return 12%

Stock A: Standard deviation 40%

Stock B: Expected Return 14%

Stock B Standard Deviation 60%

Correlation between a and b .35

Stock A beta .9

Stock B beta 1.2

%portfolio ins Stock A 45%

% portfolio in Stock B 55%

a. Calculate the expected return of the portfolio.

b. Calculate the standard deviation of the portfolio.

c. Calculate the beta of the portfolio

4. Does the portfolio have more risk, less risk, or the same risk as the market? Explain.
5. Will your portfolio likely outperform, underperform, or perform the same as the market in a period when stocks are rapidly falling in value? Why?