For a portfolio that is equally invested in Johnson \& Johnson's and Walgreen's stock, calculate: a. The expected return. b. The volatility (standard deviation). a. The expected return. The expected return of the portfolio is \%. (Round to one decimal place.) View an example | All parts showing Suppose Johnson \& Johnson and the Walgreen Company have the expected returns and volatilities shown below, with a correlation of 22.5% For a portfolio that is equally invested in Johnson \& Johnson's and Walgreen's stock, calculate: a. The expected return. b. The volatility (standard deviation). a. The expected return. To find the expected return, use the following formula: E[Rp]=wjE[Rj]+wwE[Rw] In this case, the portfolio weights are wj=wW=0.50 Therefore, E[RP]=0.507.3%+0.5010.2%=8.8% The expected return of the portfolio is 8.8%. b. The volatility (standard deviation). To find the volatility of the portfolio, use the following formula: SD[RP]=wj2SD[Rj]2+ww2SD[Rw]2+2wjwwCorr(Rj,Rw)SD[Rj]SD[Rw] Therefore, SD[RP]=0.5020.1582+0.5020.1972+20.500.500.2250.1580.197=0.139 The volatility of the portfolio is 13.9%