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1 2 Assume that you invest $ 1 , 0 0 0 in Stock A , $ 5 0 0 in Stock B , and

12 Assume that you invest $1,000 in Stock A, $500 in Stock B, and $500 in a savings account. The savings account gives 2% interest per year. The correlation between the annual returns of the two stocks is 50%. The annual return of Stock A has expected value 6% and variance 36%. The annual return of Stock B has expected value 8% and variance 16%. What are the expected value and variance of the annual return of your total investment?
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