(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 learned 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:

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a. If Mary invests half her money in each of the two common stocks, what are 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 .80 and Mary invest 30% in Firms A and 70% in Firms B. .