You form a portfolio by equally investing in stocks a and b, Financial Management

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You form a portfolio by equally investing in stocks a and b

You form a portfolio by equally investing in stocks A and B (i.e., investing 50% of your capital in stock A and 50% in stock B). Stock A has a standard deviation of 40%. Stock B has a standard deviation of 60%. The correlation between stocks A and B is -0.2. What is the standard deviation of return on your portfolio?

a) 25.37% b) 32.56% c) 46.18% d) 55.72%

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Financial Management: You form a portfolio by equally investing in stocks a and b

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Financial Management: You form a portfolio by equally investing in stocks a and b

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