The following table shows the annual expected returns for two stocks Probability of return Stock A Stock B 0 10 3 10 0 20 2 1 0 40 7 8 0 20 12 16 0 10 17 24 If a portfolio is made up of 40 of Stock A and 60 of Stock B, what will be the portfolios standard deviation assuming that the correlation between the two stocks is 0 40 options 7 6 8 98 5 48 6 58

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Question: The following table shows the annual expected returns for two stocks. Probability of return Stock A Stock B 0.10 -3% -10% 0.20 2 1 0.40

The following table shows the annual expected returns for two stocks.

Probability of return	Stock A	Stock B
0.10	-3%	-10%
0.20	2	1
0.40	7	8
0.20	12	16
0.10	17	24

If a portfolio is made up of 40% of Stock A and 60% of Stock B, what will be the portfolios standard deviation assuming that the correlation between the two stocks is 0.40.

options:

	7.6%
	8.98%
	5.48%
	6.58%

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