Here are the Returns and Standard Deviation for four investments. Calculate the Standard deviation of the following portfolios considering three scenarios:

50% each in Q and R, assuming the shares have

Perfect positive correlation

Perfect negative correlation

No correlation

	Return	Standard Deviation
Treasury Bills	06 %	0%
Stock P	10 %	14 %
Stock Q	14.5 %	28 %
Stock R	21 %	26 %

b)

What is static trade-off theory of capital structure? How does it affect WACC (weighted average cost of capital)? Explain with the help of graph