Consider two assets, A and B$.$ A earns $+4\%,-5\%,$ or $+3\%,$

in scenarios $1,2,$ and $3.$ B earns $-5\%,+3\%,$ or $+4\%,$ in

scenarios $1,2,$ and $3.$ Each scenario is equally likely.

Compute the expected rates of return and SD for each

asset, A and $B.$ Now, consider a portfolio of assets A and $B$

called $AB,$ where the investor holds fraction $89\%$ of his

portfolio in A and fraction $(1-89\%)$ in B$.$ Compute the

standard deviation of $AB.$ Compare the new standard

deviation to that of each asset's individual standard

deviation. What was the change in standard deviation

between asset A and portfolio $AB?$ StDev$($AB$)-$ StDev$($A$)$