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

Stock A: expected return		13%
Stock A: standard deviation		35%
Stock B: expected return		15%
Stock B: standard deviation		50%
Correlation between A and B		0.30
Stock A beta		85%
Stock B beta		1.10
% portfolio in Stock A		40%
% portfolio in Stock B		60%

a. Calculate the expected return of the portfolio.

Portfolio: expected return

b. Calculate the standard deviation of the portfolio.

Portfolio: standard deviation

c. Calculate the beta of the portfolio

d. Does the portfolio have more risk, less risk, or the same risk as the market? Explain.

e. Will your portfolio likely outperform, underperform, or perform the same as the market in a period when stocks are rapidly falling in value? Why?