Final answer:
The standard deviation of the return on this portfolio is 16.412%.
Step-by-step explanation:
To calculate the standard deviation of a portfolio composed of two stocks, we can use the formula:
Std. Dev. of Portfolio = sqrt(wa^2 x sa^2 + wb^2 x sb^2 + 2 x wa x wb x sa x sb x cor)
where wa and wb are the weights of stocks A and B in the portfolio, sa and sb are the standard deviations of returns for stocks A and B, and cor is the correlation coefficient between the returns of the two stocks.
Plugging in the given values, we have:
wa = 0.32, wb = 1 - wa = 0.68
sa = 17%, sb = 15%, cor = 0.36
Substituting these values into the formula, we get:
Std. Dev. of Portfolio = sqrt((0.32^2 x 0.17^2) + (0.68^2 x 0.15^2) + (2 x 0.32 x 0.68 x 0.17 x 0.15 x 0.36)) = 0.16412 or 16.412%