An investment portfolio in Finland specializes in pulp and paper stocks and includes two of them. One is Valmet (mean 0.1; standard deviation .025), and it accounts for 40% of the portfolio shares. The other Finnish pulp and paper manufacturer present in the portfolio is Stora Enso (mean 0.22; standard deviation 0.3), a higher-risk, higher-return investment.

a. What is the expected value and the standard deviation of the portfolio if the coefficient of correlation of the two stocks is 0.7?

b. What will they be if the correlation is 0.4 instead?