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Suppose Sarah has a portfolio of stocks and bonds with the following characteristics: Stock Portfolio: Expected Return: 10% Standard Deviation: 15% Bond Portfolio: Expected Return:

Suppose Sarah has a portfolio of stocks and bonds with the following characteristics:

  • Stock Portfolio:
    • Expected Return: 10%
    • Standard Deviation: 15%
  • Bond Portfolio:
    • Expected Return: 5%
    • Standard Deviation: 8%

Sarah wants to optimize her portfolio allocation to maximize her expected return while minimizing her portfolio's overall risk. She aims to allocate 70% of her investment in stocks and 30% in bonds. Calculate the expected return and standard deviation of Sarah's optimized portfolio.

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