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( Computing the standard deviation for a portfolio of two risky investments ) Mary Guilott recently graduated from Nichols State University and is anxious to

(Computing the standard deviation for a portfolio of two risky investments) Mary Guilott recently graduated from Nichols State University and is anxious to begin investing her meager savings as a way of applying what she has leamed in business school. Specifically, she is evaluating an investment in a portfolio comprised of two firms' common stock. She has collected the following information about the common stock of Firm A and Firm B:
a. If Mary invests half her money in each of the two common stocks, what is the portfolio's expected rate of return and standard deviation in portfolio return?
b. Answer part a where the correlation between the two common stock investments is equal to zero.
c. Answer part a where the correlation between the two common stock investments is equal to +1.
d. Answer part a where the correlation between the two common stock investments is equal to -1.
e. Using your responses to questions a-d, describe the relationship between the correlation and the risk and return of the portfolio.
a. If Mary decides to invest 50% of her money in Firm A's common stock and 50% in Firm B's common stock and the correlation between the two stocks is 0.40, then the expected rate of return in the portfolio is %.(Round to two decimal places.)
Data table
\table[[,\table[[Expected],[Return]],\table[[Standard],[Deviation]]],[Firm A's common stock,0.17,0.15],[Firm B's common stock,0.19,0.23],[Correlation coefficient,0.40,]]
(Click on the icon in order to copy its contents into a spreadsheet.)
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