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3. The following are estimates for two stocks. StockExpected return Beta Firm-specific standard deviation |...

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3. The following are estimates for two stocks. StockExpected return Beta Firm-specific standard deviation | 0.8 | 20% 1.3 | 25% 14% 19% The market index has a standard deviation of 23% and expected return of 7%. Risk free rate is 2%. a. What are standard deviations of stock A and B. b. What is the correlation coefficient between stock A and B. c. Suppose we construct a portfolio with the 30% A and 40% B and 30% risk free rate. Compute the expected return, standard deviation, and beta for the portfolio

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