1. Given the standard deviations of securities A and B are 14.39% and 9.53%; if the proportion of investment in A is 60% and in B is 40%. The covariance between A and B is 0.00054. Calculate the risk of this investment.

1. A portfolio is formed as follows:

Stock	Amount Invested (Shs,000)	Beta	(R)
A	12,000	1.25	25%
B	13,000	1.20	22%

The riskless rate is 7%, and the expected return on the market is 14%. The covariance between the two stocks is 0.0385.

Required:

Calculate

1. the expected return,
2. The standard deviation of returns of the portfolio.