Asset 1 has an expected return of 10% and a standard deviation of 20%. Asset 2 has an expected return of 15% and a standard deviation of 30%. The correlation between the two assets is 1.0. Portfolios of these two assets will have a standard deviation ________. A. between 0% and 20% B. between 0% and 30% C. below 10% D. between 20% and 30%

The combination of various financial investments such as stocks, bond derivatives, cash and cash equivalents and any other securities in order to earn profit or achieve long term financial goal is called portfolio.

Given: asset 1 asset2

Expected return= 10% 15%

Standard deviation= 20% 30%

Correlation between two assets=1.0

To find the standard deviation of two assets

w1=X

w2=1-X

w1=SD of asset 2/SD of asset 1+ SD of asset 2

=0.3/0.2+0.3

=0.6

w2=1-0.6=0.4

Standard Deviation of Two asset=σP = √(w1² * σ1²+ w2² * σ2²+ 2 * w1 * w2 * σ1 * σ2 * ρ12)

Where:

σP = portfolio standard deviation

w1 = weight of asset 1 in the portfolio

w2 = weight of asset 2 in the portfolio

σ1 = standard deviation of asset 1

σ2 = standard deviation of asset 2; and

ρ12 = correlation of asset 1 and asset 2

σP = √(0.6)² * (0.2)² + (0.4)² *(0.3)² + 2*(0.6)*(0.4)*(0.2)*(0.3)*1

=0.24 or 24%

so it can be said that standard deviation is being between 0% and 30% as well as between 20% and 30%.

Therefore, option B and D aptly describes the statement.

Learn more about portfolio here:

https://brainly.com/question/10702105