There is given the following infomation in the table. An investor has A with a value of $400 000, and stock B with a value of $100 000. What is the expected return and risk measured by the standard deviation of such an investors portfolio?

Company A: 10% expected return , 9% risk (standard deviation), PAB= 0.4 correlation

Company B: 13% expected return , 12% risk (standard deviation), PAB= 0.4 correlation

select one correct answer:

a. Rp=8.75%, sp=10.42%

b. Rp=10.6%, sp=8.45%

c. Rp=8.75%, sp=7.14%

d. Rp=10.6%, sp=10.42%

Explain your answer with steps