An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 and 70 percent in a T-bill that pays 6 percent. His portfolio's expected return and standard deviation are and , respectively.

In order to find the standard deviation of the portfolio will multiply the standard deviation of the risky asset with its weight only because the T bill has no risk or variance therefore the standard deviation of the portfolio will only be contributed by the risky asset.

Standard deviation of risky asset =(0.04)^0.5 =0.2

Weight of Risky asset = 0.30

=0.30*0.2=0.06

=6%

An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 and 70 percent in a T-bill that pays 6 percent. His portfolio's expected return and standard deviation are __________ and __________, respectively.

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An investor invests 30 percent of his wealth in a risky asset with an expected rate of return of 0.15 and a variance of 0.04 and 70 percent in a T-bill that pays 6 percent. His portfolio's expected return and standard deviation are and , respectively.