Question: Consider two assets, A and B. A earns +4%, 5%, or +3%, in scenarios 1, 2, and 3. B earns 5%, +3%, or +4%, in

Consider two assets, A and B. A earns +4%, –5%, or +3%, in scenarios 1, 2, and 3. B earns –5%, +3%, or +4%, in scenarios 1, 2, and 3. Each scenario is equally likely. Compute the expected rates of return and SD for each asset, A and B. Now, consider a portfolio of assets A and B called AB, where the investor holds fraction 76% of his portfolio in A and fraction (1-76%) in B. Compute the standard deviation of AB. Compare the new standard deviation to that of each asset's individual standard deviation. What was the change in standard deviation between asset A and portfolio AB? StDev(AB) - StDev(A) PLEASE ANSWER TO 4 DECIMAL PLACES!!

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