1a. If the covariance between Stock A and Stock B is 0.00196 and the standard deviation for Stock A and stock B are 20% and 10% respectively, what is the correlation between A and B?

1b. Assume Michael has a diversified portfolio that had an actual an actual return of 15% last year. During the same time, the market returned 12%. The risk-free rate of return for this period was 4%, and the beta for Michaels portfolio was 1.55(or 25% more volatile than the market). Michael wants to know whether his portfolio performed well on a risk-adjusted basis.