Question: (Computing the standard deviation for a portfolio of two risky investments) Mary Guliott recently graduated from Nichols State University and is anxicus to begin investing
(Computing the standard deviation for a portfolio of two risky investments) Mary Guliott recently graduated from Nichols State University and is anxicus to begin investing her meagor savings as a way of applying what she has learned in business school. Specitically, she is evaluating an investment in a portfolio corriprised of two firms' common stock. She has collected the following information about the common stock of Firm A and Firm B: a. If Mary invests half her money in each of the two common stocks, what is the portfolio's expected rate of relum and standard deviation in portlosio return? b. Answer part a where the correiation between the two common stock investments is equal to zero: c. Answer part a where the correlabion botween the two comenon stock investments is equal to +1. d. Answer part a where the correlation between the two common stock invesiments is equal to 1. e. Using your responses to questions a-d, describe the relationship between the correlation and the risk and retum of the portfolio. a. If Mary decides to invest 50% of her money in Firm A's common stock and 50% in Firm B's common stock and the correlation between the two stocks is 0.70, then the expected rate of return in the portfolio is 15%. (Round to two decimal places.) Data table
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