Consider shares in two companies, X and Y, as follows:

	E(Ri)	Qi
Share x	10%	20%
Share Y	30%	50%

The correlation between X and Y (i.e. XY) = 0.4

(a)What is the expected return and standard deviation of a portfolio comprising 25% invested in share X and 75% invested in share Y?

(b)Recalculate the portfolios expected return and standard deviation assuming equal weights in X and Y.