Your analysis of outcomes for sales and the associated rate of return on common stocks for companies X and Y are shown below. You intend to form a portfolio by allocating 45% of your funds in Company X, and the remainder in Company Y.

probability ROR for X ROR for Y

declining 35% -1.0 % 6.3% flat 35 10.7 18.9 rising 30 18.9 -16.0

What is the expected return and standard deviation of portfolio returns?

Select one:

a. The portfolio E(R) is 6.29% and the standard deviation is 44.61%

b. The portfolio E(R) is 5.98% and the standard deviation is 44.61%

c. The portfolio E(R) is 6.29% and the standard deviation is 6.68%

d. The portfolio E(R) is 5.23% and the standard deviation is 3.86%

e. The portfolio E(R) is 5.98% and the standard deviation is 6.68%