WeVest Financial Advisors suggests an investment in two stocks (40% in Stock A and 60% in Stock B). They claim the investment will reduce risk through diversification, but they need proof. This is the historical returns for the two stocks.

a. Using a 40/60 split, what is the weighted average standard deviation of the two stocks? (Enter your answer as a percent rounded to two decimal places.)

c. What is the reduction in standard deviation that results from the creation of a portfolio of the two stocks? (Enter your answer as a percent rounded to two decimal places.)

(%) Stock Returns Stock A B Year 2012 2013 2014 2015 2016 14 . 87% 15.78 12.57 10.81 11.28 10 . 96% 12.08 10.19 11.81 7.51