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

Stock A: expected return 10%

Stock A: standard deviation 30%

Stock B: expected return 13%

Stock B: standard deviation 45%

Correlation between A and B 0.25

Stock A beta 1.30

Stock B beta 1.20

% portfolio in Stock A 40%

% portfolio in Stock B 60%

a. Calculate the expected return of the portfolio.

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, under perform, or perform the same as the market in a period when stocks are rapidly falling in value? Why?