The expected return on Big Time Toys is 10% and its standard deviation is 21.8%. The expected return on Chemical Industries is 12% and its standard deviation is 27.7%.

a.Suppose the correlation coefficient for the two stocks' returns is 0.31. What are the expected return and standard deviation of a portfolio with 62% invested in Big Time Toys and the rest in Chemical Industries?(Round your answers to 2 decimal places.)

Portfolio's expected return

%Portfolio's standard deviation

%

b.If the correlation coefficient is 0.81, recalculate the portfolio expected return and standard deviation, assuming the portfolio weights are unchanged.(Round your answers to 2 decimal places.)

Portfolio's expected return

%Portfolio's standard deviation

%

c.Why is there a slight difference between the results, when the correlation coefficient was 0.31 and when it was 0.81?