2) (1) Explain what is meant by an investment portfolio and advantages of investing in a portfolio rather than investing in a single asset. (ii) You are currently considering in investing Rs.1.2 million in equity investment portfolio. Your analysis reveals that equity stock of the following three companies are suitable options for your investment Company P 25 30 22 26 R 20 24 Expected return (%) Standard deviation (%) Correlation coefficient; PQ QR PR -0.5 +0.4 +0.6 You are required to; (a) Calculate the expected return of the portfolio if Rs.1.2 million is equally invested in the stocks of all three companies. (b) Assume you prefer a portfolio consisting of two stocks, each with an equal amount of investment. Calculate expected returns and standard deviation of all possible two-stock portfolios. (c) Explain the reasons for the differences in the standard deviations of the portfolios, as calculated in part (b) above