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1. Bonds have an expected return of 7% and an annual standard deviation of 10% and...

1. Bonds have an expected return of 7% and an annual standard deviation of 10% and the stock market has an expected return of 12% and an annual standard deviation of 25%. Assume that the correlation between bond returns and stock returns is 0.5. You choose to invest 75% in stock market and 25% in bonds. The expected annual return of your portfolio is ____________%

2. Bonds have an expected return of 7% and an annual standard deviation of 10% and the stock market has an expected return of 12% and an annual standard deviation of 25%. Assume that the correlation between bond returns and stock returns is 0.5. You choose to invest 75% in stock market and 25% in bonds. The expected annual standard deviation of your portfolio is _________ %.

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- - Stock 1270 Given, Boud Expected return 7% Standard deviation 10%. Correlation () oos Weight 0.25 2596 0.75 - Expected ret

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