Stu Has Decided to Invest $6,800 in a Risky Asset

Multiple Choice

Stu has decided to invest $6,800 in a risky asset that has an expected return of 11.3 percent and a standard deviation of 21.2 percent.He will also invest $3,200 in a risk-free asset with an expected return of 4.2 percent.The market risk premium is 7.1 percent.What is the standard deviation of his portfolio?

A) 3.30 percent
B) 11.94 percent
C) 6.87 percent
D) 9.25 percent
E) 14.42 percent