Q. No. 1.

(15)

The common stock of companies A and B have the expected return and varian given below; the expected correlation coefficient between the two stocks is -.35. Expected return Variance Stcok A .10 .0025 Stock B .06 .0016

Compute the risk and return for a portfolio comprised of 60 percent invested in the stock of company A and 40 percent invested in the stock of company B.