#1. Suppose you have the opportunity to purchase stock in Google and Walmart with the following risk-return profiles: Google Walmart Expected Return (Mean) 2.0% 2.5% Risk (Std. Dev.) 1.5% 2.0% Given no short sales, what is the minimum-risk portfolio of Google and Walmart under alternative assumptions for the correlation between the two stocks at 0.0, +0.5, +1.0, and -1.0? What are the corresponding expected return and standard deviations of these alternative minimum-risk portfolios? #2. Continuing from the previous problem, what is the optimal combination of these two securities in a risky portfolio for each of the four alternative values of the correlation coefficient, assuming the existence of a risk-free T-bill fund paying a return of 1%? What is the risk level, measured by the standard deviation, of each of the alternative optimal risky portfolios? What is the expected return of each of the optimal risky portfolios? What is the market price of risk? [Note: the Mathcad template will work for the first two parts of this question but not for the last two parts (Correlations of +1 and -1). I suggest you inspect the results from question #1 in terms of the graphs from the last two parts (Correlations of +1 and -1) in formulating answers to the final two parts of question #2.]