Problem:
Suppose the expected returns and standard deviations of stocks A and B are E(Ra) =0.15, E(Rb) = 0.25, Stdev A = 0.1, and Stdev B = 0.2, respectively. Calculate the expected return and standard deviation of a portfolio that is composed of 40% A and 60% B when the correlation between the returns on A and B is 0.5.