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1. Suppose that you have the opportunity to buy stock in AT&T and Mi- crosoft AT&T Microsoft Mean Standard Deviation 0.15 0.25 0.10 0.21 (a)

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1. Suppose that you have the opportunity to buy stock in AT&T and Mi- crosoft AT&T Microsoft Mean Standard Deviation 0.15 0.25 0.10 0.21 (a) What is the expected return of a portfolio made up of half AT&T and half Microsoft? (b) Assue the correlation between the two stocks is 0.5. What is the variance of a portfolio made up of half AT&T and half Microsoft? (c) Now assume that the correlation between AT&T and Microsoft is -1. Find the weights of the two stocks that produce a minimum risk portfolio. What is the variance of this portfolio

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