Assume we have equally invested in two different companies; ABC and XYZ. We anticipate that there is a 20% chance that next year's stock returns for ABC Corp will be 5%, a 60% probability that they will be 15% and 20% probability that they will be 25%. The variance of ABC is 40%. We also anticipate that the same probabilities and states are associated with a 7% return for XYZ Corp, a 14% return, and a 21% return. The variance is 19.6%

a. Compute the expected return of the portfolio

b. Compute the standard deviation of the portfolio