1. You estimate the expected arithmetic mean, standard deviation, and correlation mix of your stock bond portfolio as follows:

	Arithmetic Mean	Standard Deviation	Correlations   Stocks                    Bonds
Stocks	10%	20%	1.0	0.4
Bonds	5%	10%	0.4	1.0

If you held a portfolio 60% in stocks and 40% in bonds, what is your portfolio expected return next year? What is the standard deviation of returns?