Final answer:
The expected return of the minimum variance portfolio is the weighted average of the expected returns of assets K and L, while the standard deviation is calculated from the portfolio variance formula that includes the asset weights, their individual standard deviations, and the correlation between the two assets.
Step-by-step explanation:
The student asked about calculating the expected return and standard deviation of the minimum variance portfolio combining two assets, K and L, with given expected returns, standard deviations, and correlation coefficient. The minimum variance portfolio is the combination of assets that will yield the lowest possible variance (and standard deviation) of returns, considering the correlation between the assets.
To find the weights of asset K and L in the minimum variance portfolio, you would typically solve for the portfolio weights that minimize the variance of returns formula, taking into account the correlation between the assets. However, since no specific formula was provided for weights, we can only mention the general approach, which involves the use of derivatives and solving a system of equations.
The expected return of the minimum variance portfolio would be a weighted average of the individual expected returns of assets K and L, based on the weights determined in the previous step. The standard deviation would be calculated using the portfolio variance formula which incorporates the weights, standard deviations, and correlation between the assets.