What is the standard deviation of the portfolio with a 50/50 allocation?

Question by cbbeangirl: What is the standard deviation of the portfolio with a 50/50 allocation?
12.Asset A has an expected return of 8% and a standard deviation of 16%; asset B has an expected return of 12% and a standard deviation of 25%. If the covariance (COV) of the two assets is 0.006, what is the standard deviation of the portfolio with a 50/50 allocation?
thanks a million


Answer
Answer by eternal studentCorrelation between A and B is Covariance(A,B)/(SDa*SDb) = 0.006/(0.16*0.25) = 0.15

Variance of the portfolio = 0.5^2(0.16)^2 + 0.5^2(0.25)^2 +

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