The following information about Stock A & Stock B is given:

	Stock A	Stock B
Expected return	.10	.12
Standard deviation	.11	.219
Market beta	1.2	.80

a. The returns of Stock A and Stock B are highly negatively correlated. If Stock A and Stock B are combined into a 50:50 (A:B) portfolio, the expected return on the portfolio in decimal form rounded to the nearest .001 will be __________

b. The returns of Stock A and Stock B are highly negatively correlated. If Stock A and Stock B are combined into a 50:50 (A:B) portfolio the portfolio beta rounded to the nearest .001 will be __________

c. The returns of Stock A and Stock B are highly negatively correlated. If Stock A and Stock B are combined in a 50:50 (A:B) portfolio the portfolio standard deviation in decimal form rounded to the nearest .001 would be __________ Multiple choice:

Less than 0.11

Cannot be determined from the information

Greater than .219

Between 0.11 and .219

d. The returns of Stock A and Stock B are highly negatively correlated. If Stock A and Stock B are combined in a 50:50 (A:B) portfolio the standard deviation of the portfolio in decimal form rounded to the nearest .001 would be __________ 

Multiple choice:

.000

Cannot be determined from the information

Between .11 and .219

Greater than .219

Answer rating: 100% (QA)

a Expected Return of the AB portfolio Weight of Stock A Return of Stock A W... View the full answer