Question: Consider the following data about the expected returns, standard deviations, and correlation between two assets: Asset 1 Asset 2 Expected return 5.3% 6.8% Standard deviation

Consider the following data about the expected returns, standard deviations, and correlation between two assets:

	Asset 1	Asset 2
Expected return	5.3%	6.8%
Standard deviation	4.5%	7.8%
Correlation coefficient	-0.6

Calculate the expected return and standard deviation of a portfolio consisting of a 20% weight in asset 1 and an 80% weight in asset 2. What happens to the expected return and standard deviation of the portfolio when the weight combination changes to 50% in asset 1 and 50% in asset 2?

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