The expected return on Big Time Toys is 9% and its standard deviation is 20%. The expected return on Chemical Industries is 8% and its standard deviation is 25%.
a. Suppose the correlation coefficient for the two stocks’ returns is .2. What are the expected return and standard deviation of a portfolio with 30% invested in Big Time Toys and the rest in Chemical Industries? (Round your answers to 1 decimal places.)
Portfolio's expected return %
Portfolio's standard deviation %
b. If the correlation coefficient is .7, recalculate the portfolio expected return and standard deviation, assuming the portfolio weights are unchanged. (Round your answers to 1 decimal places.)
Portfolio's expected return %
Portfolio's standard deviation