Question: Problem 1 (10 points). You form a portfolio from a riskless asset and two stocks, A and B. Here is some information about these assets:

Problem 1 (10 points). You form a portfolio from a riskless

Problem 1 (10 points). You form a portfolio from a riskless asset and two stocks, A and B. Here is some information about these assets: Asset Stock A Stock B Riskless Asset Expected Return 13% 20% 5% Standard Deviation 40% 60% Correlation (A, B) 0.2 a) (5 points) What is the standard deviation of a portfolio that invests 40% in Stock A, 40% in Stock B, and the rest, 20%, in the riskless asset? b) (5 points) What's the portfolio's Sharpe ratio

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