Here are returns and standard deviations for four investments.  Return Standard Devia...

Here are returns and standard deviations for four investments.

Calculate the standard deviations of the following portfolios.

a. 50% in Treasury bills, 50% in stock P.

b. 50% each in Qand R, assuming the shares have

• perfect positive correlation

• perfect negative correlation

• no correlation

c. Plot a figure like Figure 8.3 for Qand R, assuming a correlation coefficient of .5.

d. Stock Qhas a lower return than R but a higher standard deviation. Does that mean that Qs price is too high or that R’s price is too low?