In: Finance
*Please show work and explain*
Given the following information:
Expected return on Stock Fund A |
.12 (12%) |
Standard deviation of the return of Stock Fund A |
.20 (20%) |
Expected return on Bond Fund B |
.07 (7%) |
Standard deviation of the return of Bond Fund B |
.10 (10%) |
Correlation coefficient of the returns between Fund A and Fund B |
.3 |
What is the standard deviation of a portfolio that consists of 70% of the portfolio’s total funds in Stock Fund A and 30% of Bond fund B?
Show your answer in percentage terms to two places to the right of decimal