German Bunds: Return: 6.0%; Standard Deviation: 0.0%

Stock A: Return: 10.0%; Standard Deviation: 14.0%

Stock B: Return: 14,5%; Standard Deviation: 28.0%

Stock C: Return: 21.0%; Standard Deviation: 26.0%

Please determine the standard deviation of the following portfolios:

a)50% in German Bunds and 50% in Stock A!

b)50% each in Stock B and Stock C, assuming the shares feature:

a. a perfect positive correlation.

b. a perfect negative correlation.

c. no correlation at all.

c)Please plot the expected return r (%) versus the standard deviation (%) for Stock B and Stock C whilst assuming a coefficient of correlation of 0.5!

d)Stock B features a lower return than Stock C but a higher standard deviation. Does that mean that Stock B's price is too high or that Stock C's price is too low?