Calculate the expected returns and expected standard deviations of a two-stock portfolio in which Stock 1 has a weight of 60 percent under the conditions given below. Do not round intermediate calculations. Round your answers for the expected returns of a two-stock portfolio to three decimal places and answers for expected standard deviations of a two-stock portfolio to four decimal places.

E(R1) = 0.08
	E(R2) = 0.10
	E(σ1) = 0.01
	E(σ2) = 0.03

A: r_1,2 = 1.00

Expected return of a two-stock portfolio:

Expected standard deviation of a two-stock portfolio:

B: r_1,2 = 0.75

Expected return of a two-stock portfolio:

Expected standard deviation of a two-stock portfolio:

C: r_1,2 = 0.25

Expected return of a two-stock portfolio:

Expected standard deviation of a two-stock portfolio:

D: r_1,2 = 0.00

Expected return of a two-stock portfolio:

Expected standard deviation of a two-stock portfolio:

E: r_1,2 = -0.25

Expected return of a two-stock portfolio:

Expected standard deviation of a two-stock portfolio:

F: r_1,2 = -0.75

Expected return of a two-stock portfolio:

Expected standard deviation of a two-stock portfolio:

G: r_1,2 = -1.00

Expected return of a two-stock portfolio:

Expected standard deviation of a two-stock portfolio:

Answer rating: 100% (QA)

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