The following are estimates for two stocks. The market index has a standard deviation of 0.22 and the risk-free rate is 0.04 . Suppose that we were to construct a portfolio with proportions: Stock A 0.31 Stock B 0.44 The remaining proportion is invested in Tbills Compute the standard deviation of the portfolio. Round your answer to 4 decimat places. For example if your answer is 3.205%, then please write down 0.0321 . 0.2594 margin of error +10.01 Find the systematic risk and diversifiable risk components separately, sum them up to get the variance of the portfolio, then take the sqrt to get the std. dev, The systematic risk component = beta of portfio 2 sigmam 2, where beta of portfio= wa'betaa+wb'betab. The beta of risk-free asset is 0 (i.e. risk-free). For the diversifuable risk component, following the example we show in class