Variance of return on the portfolio

Question

Problem:

A portfolio is composed of two stocks, A and B. Stock A has a standard deviation of return of 27% while stock B has a standard deviation of return of 25%. Stock A comprises 50% of the portfolio while stock B comprises 50% of the portfolio.

Required:

Question: If the variance of return on the portfolio is .0390, the correlation coefficient between the returns on A and B is __________.

• 0.168
• 0.153
• 0.163
• 0.143

Note: Provide support for rationale.