Question: The expected returns, standard deviations, and correlation for Chihuahua Corporation and Labrador, Ltd. are shown below. Expected Return Chihuahua Labrador 14% 9% Standard Deviation

The expected returns, standard deviations, and correlation for Chihuahua Corporation and Labrador,

The expected returns, standard deviations, and correlation for Chihuahua Corporation and Labrador, Ltd. are shown below. Expected Return Chihuahua Labrador 14% 9% Standard Deviation of Returns 42% 22% Correlation(Chihuahua, Labrador) = 0.40 You have $10,000 to invest, and are trying to decide how much money to invest in each of the two companies. Calculate the expected return and standard deviations for the following mixtures: a. $7,000 of Chihuahua stock, and $3,000 of Labrador stock b. $5,000 of Chihuahua stock, and $5,000 of Labrador stock c. $2,000 of Chihuahua stock, and $8,000 of Labrador stock

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