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Stocks A and B have the following returns: Stock A Stock B 1 0.09 0.06 2 0.05 0.04 3 0.14 0.04 4 0.03 0.02 5

Stocks A and B have the following returns:

Stock A

Stock B

1

0.09

0.06

2

0.05

0.04

3

0.14

0.04

4

0.03

0.02

5

0.09

0.03

a. What are the expected returns of the two stocks?

b. What are the standard deviations of the returns of the two stocks?

c. If their correlation is 0.47, what is the expected return and standard deviation of a portfolio of 55% stock A and 45% stock B?

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