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CONSIDER THE FOLLOWING INFORMATION FOR THE NEXT THREE QUESTIONS: You are given the following information about stocks A and B. E(RA) 16% E(RB) 10% 3% wwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwwww 2% , 0.8 wwwwwwwwwwwwwww w B. 19. You have $20,000 to invest in stocks A and B. If you decide to invest 20% of your amount in stock A, what is the expected return and standard deviation on the portfolio consisting of stocks A and B respectively? A. 14.80 percent and 2.73 per cent 11.20 percent and 2.11 per cent C. 11.20 percent and 1.18 per cent Wa = 20% = 0.20 , W3 = 1- W = 0.80 R = 0.20 *16% +0.80* 10% =11.20% 02 Now, P = (0.20 )^2 * (3)^2 + (0.80)^2 *(2)^2 + 2 * 0.20*0.80* 3*2*0.8 = 4.456 % OP = (4.456)^0.5 = 2.11% Answer : option B. 20. Suppose you would like to invest an additional amount of $5000 in the portfolio consisting of the stocks A and B. If there is a risk-free asset that has rate of return of 5%, what will be your expected return and standard deviation on the portfolio respectively? A. 11.20 percent and 1.18 per cent B. 14.50 percent and 2. 26 per cent C. 12.75 percent and 2.64 per cent wwwwwwwwwwwwwww