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Katie is given the following information about the returns on two stocks: E ( R 1 ) = 0.10, E ( R 2 ) =

Katie is given the following information about the returns on two stocks:

E(R₁) = 0.10, E(R₂) = 0.15, V(R₁) = 0.0225, and V(R₂) = 0.0441.

{Katies Portfolio Narrative} Compute the variance of the portfolio composed of 30% stock 1 and 70% stock 2, if the coefficient of correlation is 0.40.

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