1) Comment and discuss on the correlation, and the risk and return on the two stocks 2) Comment and discuss on the efficient frontier as a means to reduce risk but still preserve a reasonable return for investors

E(R1) = E(R2) = 9.00% 24.00% sigma(R1) = sigma(R2) = 13% 16% rho(R1,R2) = 0.35 Portfolio Frontier 25.00% w1 0% 20.00% 5% 10% 15% 20% w2 100% 95% 90% 85% 80% 75% 70% 65% 15.00% Portfolio expected return 25% 30% 10.00% 35% 40% 60% 5.00% Portfolio standard deviation 16.00% 15.44% 14.90% 14.40% 13.92% 13.49% 13.09% 12.73% 12.42% 12.15% 11.94% 11.79% 11.69% 11.66% 11.68% 11.76% 11.90% 12.10% 12.35% 12.65% 13.00% 0.00% 0.00% Portfolio expected return 24.00% 23.25% 22.50% 21.75% 21.00% 20.25% 19.50% 18.75% 18.00% 17.25% 16.50% 15.75% 15.00% 14.25% 13.50% 12.75% 12.00% 11.25% 10.50% 9.75% 9.00% 45% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 20.00% 5.00% 10.00% 15.00% Portfolio standard deviation