1.You have the following information for asset A and asset B:

Eexpected Return A: 14%

Standard Deviation A: 24%

Expected Return B: 7%

Standard Deviation B: 11%

Correlation between A and B is 0.25

a.For an equally weighted portfolio of the two assets, find the expected return and standard deviation of the portfolio.

b.If the portfolio weights are 15% in asset A and 85% in asset B, what is the expected return and the standard deviation of the portfolio?

c.Would anyone hold this portfolio of asset A and asset B?Demonstrate/Explain.

d.Would an investor who is relatively less risk-averse be more likely or less likely to prefer the equally weighted portfolio to a portfolio that is 70% invested in A and 30% invested in B?Explain.