Question:

Calculate three expected portfolio rate of return and standard deviation of a portfolio with the following stocks:

50 % Company A Rate of return 5 %, Standard deviation0.1

25 % Company B Rate of return 17 %, Standard deviation 0.3

25 % Company C Rate of return 10 %, Standard deviation0.25

The correlation between the stocks of company A and B is 0.3;

the correlation between the stocks of company B and C is 0.05;

and the correlation between the stocks of company A and C is 0.2