An investment fund has a total value of $10 million and invests in two assets: stocks and bonds. The fund manager estimates that the probability of the stocks generating a return of 10% is 0.3, while the probability of the bonds generating a return of 5% is 0.7. The stocks and bonds have a correlation of 0.5. If the fund invests 60% of its portfolio in stocks and 40% in bonds, what is the expected return of the portfolio and what is its standard deviation?

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The detailed answer for the above question is provided below Let X be the random variable representing the return on the portfolio We can express X as ... View the full answer