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    Calculating expected return and standard deviation

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    Stock A has an expected return of 12% and a standard deviation of 40%. Stock B has an expected return of 18% and a standard deviation of 60%. The correlation coefficient between Stocks A and B is 0.2. What are the expected returns and standard deviation of a portfolio invested 30% in Stock A and 70% in Stock B?

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    Solution Preview

    Weight of stock A=wa=0.3
    Weight of stock B=wb=0.7
    Expected return from stock A=E(Ra)=12%
    Standard deviation of stock A=sa=40%
    Expected ...

    Solution Summary

    Solution describes the steps to calculate expected return and standard deviation of the given portfolio.

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