What is the standard deviation of the risk-free asset, Finance Basics

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What is the standard deviation of the risk-free asset

Problem

Alexander has invested half of his money in Microsoft's stock, a quarter in Amazon's, and the remainder in treasury bonds. The standard deviation of Microsoft and Amazon is 40 percent and 20 percent, respectively. Suppose the correlation between Microsoft and Amazon is 0.6. Assume zero correlation between bonds/stocks and zero variance for treasury bonds.

a) What is the standard deviation of the risk-free asset?

b) What is the standard deviation of Alexander's portfolio?

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