Suppose Stock A has an expected return of 15%, a standard deviation of 20%, and a Beta of 0.4 while Stock B has an expected return of 25%, a standard deviation of 30% and a beta of 1.25, and the correlation between the two stocks is 0.25. What is the standard deviation for a portfolio with 80% invested in Stock A and 20% invested in Stock B?

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A: Expected return = Risk free rate + beta * (market return -risk free rate )

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A: We can calculate expected return and standard deviation by using following formulas Expected return…

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A: Required return: It is the minimum rate of return an investor will seek for investing in a company.…

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