nvest equally in 2 mutual funds. ABC stock index and XYZ long-term goverment bond index fund. Table provides monthly historical returns for the past 20 years. What is the standard deviation of this portfolio? A. 16.74% B. 11.83% C. 14.59% D. 19.47% E.12.38%ABC StockXYZ BondReturn15.25%7.5%Std. Dev21.5%5.85%Correlation0.25 Solution Portfolio Standard Deviation=Underroot(A2A2+B2B2+2AABB) Where, A = weight of asset A in the portfolio; B = weight of asset B in the portfolio; A = standard deviation of asset A; B = standard deviation of asset B; and = correlation coefficient between returns on asset A and asset B. Portfolio Standard Deviation=(((0.5^2)*(0.215^2))+((0.5^2)*(0.0585^2))+(2*0.5*0.5*0.215*0.0585*0.25))^(1/2) = 11.83%.