If you invest 25% of your money in C and 75% in D, what would be your portfolio's expected rate of return and standard deviation?
Consider the following probability distribution for stocks C and D:
A. 9.891%; 8.70%
B. 9.945%; 11.12%
C. 8.225%; 8.70%
D. 10.275%; 11.12%
C. 8.225%; 8.70%
E(RP) = 0.25(4.4%) + 0.75(9.5%) = 8.225%; sP = [(0.25)2(10.35)2 + (0.75)2(12.93)2 + 2(0.25)(0.75)(10.35)(12.93)(-0.50)]1/2 = 8.70%.
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