Suppose Johnson & Johnson and Walgreen Boots Alliance have expected returns and volatilities shown here,with a correlation of

23%.

Calculate (a) the expected return and (b) the volatility (standard deviation) of a portfolio that consists of a long position of $8,000

in Johnson & Johnson and a short position of $3,000 in Walgreens.

Johnson & Johnson Expected Return 6.9% Standard Deviation 17.8%

Walgreens Boots Alliance Expected Return 9.6% Standard Deviation 20.7%

a. Calculate the expected return.

The expected return is _________(Answer)

(Round to one decimal place.)

b. Calculate the volatility (standard deviation).

The volatility is __________(Answer)

(Round to one decimal place.)