Portfolio Standard Deviation Suppose the expected returns and standard deviations of

Stocks A and B are $E(R_A)=\mathrm{.}10,E(R_B)=\mathrm{.}12,{}_A=\mathrm{.}39,$ and ${}_B=\mathrm{.}72.$

a$.$ Calculate the expected return and standard deviation of a portfolio that is composed

of $40$ percent A and $60$ percent B when the correlation between the returns on

A and $B$ is $\mathrm{.}5.$

b$.$ Calculate the standard deviation of a portfolio with the same portfolio weights

as in part $($a$)$ when the correlation coefficient between the returns on A and B

is $-\mathrm{.}5.$

c$.$ How does the correlation between the returns on A and B affect the standard devia$-$

tion of the portfolio?