Consider a two-stock portfolio consisting of 200 shares of KL Enterprises at $25/share and 100 shares of Sherman Inc. at $75/share.

You also have the following data:

The correlation of the returns for KL and Sherman is 0.1. What is the expected return and standard deviation of each stock and of your portfolio?

KL Enterprises States of Nature Poor Average Outstanding Sherman Inc. Probability Return 0.25 -0.10 0.50 0.10 0.25 0.30 States of Nature Poor Probability Return 0.15 -0.20 0.55 0.10 0.30 0.50 Average Outstanding