The Bank of Tinytown has two $20,000 loans that have the following characteristics. Loan A has an

Question:

The Bank of Tinytown has two $20,000 loans that have the following characteristics. Loan A has an of 10 percent and a standard deviation of returns of 10 percent. The and standard deviation of returns for loan B are 12 percent and 20 percent, respectively.
a. If the correlation coefficient between loans A and B is 0.15, what are the and standard deviation of this What is the standard deviation of the if the correlation is -0.15?
c. What role does the covariance, or correlation, play in the risk reduction attributes of modern theory? Expected Return
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