1. Tammy Deitel has $10,000 and is forming a portfolio with Stocks P and Q.

[The weights of P and Q in the portfolio are both positive.]

	P	Q
Expected return, r (%)	16	23
Standard deviation, (%)	19	27

The standard deviation of the portfolio can be smaller than 19 if the correlation between P and Q is significantly ___________.

Group of answer choices

(A) positive

(B) negative

2. You have $20,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 14 percent and Stock Y with an expected return of 7 percent. Your goal is to create a portfolio with an expected return of 12.5 percent. All money must be invested. The weight of Stock X in your portfolio should be __________%. Round-off to 1 decimal place.

Group of answer choices

(A) 70.0

(B) 75.0

(C) 25.0

(D) 50.0

(E) 62.5

(F) 78.6