Your portfolio consists of two assets: $10,500 of intel's corporate bonds and $15,700 of microsoft stock. the standard deviations of returns for intel's bonds and microsoft stock are 12% and 27%, respectively. the correlation between these two investments is 0.33. what is the standard deviation of your portfolio?

18.35%

Step-by-step explanation:

The proportion of the standard deviation of return of the portfolio combining two assets A and B is given by

where

= proportion of asset A in the investment.

= proportion of asset B in the investment.

= proportion of standard deviation of return for asset A.

= proportion of standard deviation of return for asset B.

R(A,B) = correlation between the two investments

The total investment is

$10,500 + $15,700 = $26,200

Let A be the asset of Intel's corporate bonds and B the asset of Microsoft stocks

R(A,B) = 0.33

Replacing in our formula

δabc ≅ δdcb by sas because

db ≅ ac . . given (side)

bc ≅ bc . . reflexive property (side)

∠dbc ≅ ∠ acb . . alternate interior angles where transversal bc crosses parallel lines bd and ac (included angle)