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3) Suppose that your friend has decided to construct a portfolio that will contain stock X, stock Y, and the risk-free asset

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3) Suppose that your friend has decided to construct a portfolio that will contain stock X, stock Y, and the risk-free asset. The standard deviations of stock X and stock Y are 12% and 16% respectively, and the correlation between stock X and stock Y is 0.6. Your friend has decided to put 40% of his money on stock X, 30% on stock Y, and the rest on the risk-free asset. What is the standard deviation of his portfolio? a) 8.59% b) 9.23% c) 10.88% d) 14.59% e) None of the above