The expected return on MSFT next year is 12% with a standard deviation of 20%. The expected return on AAPL next year is 24% with a standard deviation of 30%. The correlation between the two stocks is .6
If James makes equal investments in MSFT and AAPL, what is the expected return on his portfolio.
A) 21.45%
B) 25.00%
C) 4.60%
D) 15.00%
Answer: A
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