Stock a Has an Expected Return of 20%, and Stock

Multiple Choice

Stock A has an expected return of 20%, and stock B has an expected return of 4%. However, the risk of stock A as measured by its variance is 3 times that of stock B. If the two stocks are combined equally in a portfolio, what would be the portfolio's expected return?

A) 20.0%.
B) 4.0%.
C) 12.0%.
D) Greater than 20%.