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Question 1 gives you the information of the stocks and their correlation, which will be used in many of the following questions. James, a portfolio

Question 1 gives you the information of the stocks and their correlation, which will be used in many of the following questions.

James, a portfolio manager, would like to form the following portfolio between Microsoft and Coca-Cola:

Expected return (%) Standard Deviation (%) Weight

Microsoft 28 42 0.4

Coca-Cola 12.5 21 0.6

The correlation between the two stocks is 0.5.

What is the expected return and standard deviation of the portfolio?

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