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Stocks A and B have the following returns: Stock A Stock B 1 0.11 0.07 2 0.04 0.02 3 0.13 0.04 4 0.04 0.02 5

Stocks A and B have the following returns:

Stock A

Stock B

1

0.11

0.07

2

0.04

0.02

3

0.13

0.04

4

0.04

0.02

5

0.09

0.03

a. What are the expected returns of the two stocks? (round to three decimal places)

b. What are the standard deviations of the returns of the two stocks? (round to four decimal places)

c. If their correlation is 0.45, what is the expected return and standard deviation of a portfolio of 50% stock A and 50% stock B? (round to four decimal places)

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