1a) Lucy just inherited $750,000. She is considering investments in securities Tik and Tok, both of which have expected returns of 17%. The standard deviation of returns for Tik is 22%, and that for Tok is 8%. The correlation coefficient between the two securities is 75%. Lucy can make the following choices:

Choice A: Put 100% of her investment in Tik

Choice B: Put 100% of her investment in Tok

Choice C: Put 50% of her investment in Tik and 50% in Tok

Which choice should Lucy make if she is risk-averse? (1 point)

Explain your answer. (3 points)