Question: Finance question: Consider the following information about the expected return and volatility of Microsoft and Walmart Stock: Expected Return Microsoft: 7.2% Volatility Microsoft: 25.1% Expected

Finance question:

Consider the following information about the expected return and volatility of Microsoft and Walmart Stock: Expected Return Microsoft: 7.2% Volatility Microsoft: 25.1% Expected Return Walmart: 9.8% Volatility Walmart: 27.9% Correlation between Microsoft and Walmart: 0.7 The volatility of an equally weighted portfolio of Microsoft and Walmart is closest to: (Hint: use the formula for the variance of a two stock portfolio plus the formula that Cov(Ri , Rj ) = corr(Ri , Rj )*SD(Ri) *SD(Rj ) ) O a. 18.77 O b. 21.79 O c. 24.44 O d. 26.50

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