Standard deviation and expected return of her portfolio

  Suppose there are three stocks in the market - A, B, and C - with the following properties: Expected Return Standard Deviation A rA = 5% QA =10% B rB = 20% QB = 40% C rC = 20% QC= 40% The return on stock C is not correlated with A and B. Correlation of returns between A and B is pA,B = —0.5. (a) Suppose that an investor allocates 40% of her wealth to stock A, 60% to stock C, and nothing to stock B. What is the standard deviation and expected return of her portfolio? (b) Suppose that an investor allocates 40% of her wealth to stock A, 60% to stock B, and nothing to stock C. What is the standard deviation and expected return of her portfolio? (c) Suppose that an investor constructs an equally weighted portfolio out of stocks A, B, and C. What is the standard deviation and expected return of her portfolio?