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You manage an equity fund with an expected risk premium of 10% and a standard deviation of 14%. The rate on Treasury bills is 6%.
You manage an equity fund with an expected risk premium of 10% and a standard deviation of 14%. The rate on Treasury bills is 6%. Your friend manages a bond fund with an expected return of 11% and a standard deviation of 11%. An investor puts $60,000 in your stock fund and $40,000 into your friends bond fund. What is the expected return and standard deviation of the investors portfolio? The correlation coefficient between the two funds is 0.65.
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