Arbor Systems and Gencore stocks both have a volatility of 42 %. Compute the volatility of a portfolio with 50% invested in each stock if the correlation between the stocks is ?
(a?) +1.00?,
(b?) 0.50, ?
(c?) 0.00?,
(d?) −0.50?,
?(e?) −1.00.
In which of the cases is the volatility lower than that of the original? stocks?