You are given the following information:

Expected return on stock A 16%

Expected return on stock B 24%

____________________________________

Standard Deviation of Returns:

Stock A 1.0

Stock B 7.0

Correlation coefficient of the returns on stocks A and B +0.1

A.) What are the expected returns and standard deviations of a portfolio consisting of:

1. 100% is in Stock A

Expected return_____%? Standard Deviation______? (two decimal places)

2. 100% in Stock B?

Expected return_____%? Standard Deviation______? (two decimal places)

3. 50% in each stock?

Expected return_____%? Standard Deviation______? (two decimal places)

4. 25% in stick A & 75% in Stock B?

Expected return_____%? Standard Deviation______? (two decimal places)

5. 75% in Stock A & 25% in Stock B?

Expected return_____%? Standard Deviation______? (two decimal places)

B.) Redo the calculations assuming that the correlation coefficient of the returns on the two stocks is -0.6.

All A	Expected Return% ?	Standard Deviation ?
All B	Expected Return% ?	Standard Deviation ?
50%A/50%B	Expected Return% ?	Standard Deviation ?
25%A/75%?B	Expected Return% ?	Standard Deviation ?
75%A/25%/B	Expected Return% ?