You have a portfolio which is comprised of 40% of Stock A and 60% of Stock B.

What is the portfolio standard deviation?

State of the Economy Probability E(RA) E(RB)

40% 60%

Boom .10 20 % 14 %

Normal .75 11 % 9 %

Recession .15 20 % 5 %

Multiple Choice

7.95%

4.00%

6.82%

5.56%

6.06%