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You are considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third

You are considering three mutual funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money market fund that yields a rate of 3%. The stock fund has an expected return of 15% and a variance of 0.25. The bond fund has an expected return of 8% and a variance of 0.09. The correlation coefficient between the stock and bond funds is 0.16. If you invest $5,000 in the stock fund and $5,000 in the bond fund. What is the standard deviation of your portfolio?

A.

0.097

B.

0.258

C.

0.106

D.

0.311

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