Given:

E(R1) = 0.10

E(R2) =0.15

1 = 0.03

2 =0.05

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

following conditions:

i. r1,2 = 1.00

ii. r1,2 = 0.75

iii. r1,2 = 0.25

iv. r1,2 = 0.00

v. r1,2 = -0.25

vi. r1,2 = -0.75

vii. r1,2 = -1.00

Calculate the expected returns and expected standard deviations of a two-stock

portfolio having a correlation coefficient of 0.70 under the following conditions:

i. w1 = 1.00

ii. w1 = 0.75

iii. w1 = 0.50

iv. w1 = 0.25

v. w1 = 0.05