Question: A bank is considering adding security brokerage services to the services it offers. It has estimated that the expected return and standard deviation of its

A bank is considering adding security brokerage services to the services

A bank is considering adding security brokerage services to the services it offers. It has estimated that the expected return and standard deviation of its traditional service are 6% and 14% respectively. It has estimated that the expected return and standard deviation of its new securities brokerage services are 14% and 24% respectively. The correlation between these services has been estimated to be -.4 and the bank estimates that 85% of its business will be from traditional services and 15% from the new services. What is the standard deviation of the new combined firm? 11.85% 9.56% 10.27% 10.97% 9.91%

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