2. The securities of companies Z and Y have the following expected returns and standard deviations: Company Z Company Y 15 Expected Return (%) Standard Deviation (%) 35 20 40 Assume that the correlation between the returns of the two securities is 0.25. (a) Calculate the expected return and standard deviation for the following portfolios: (1) 100%Z (2) 75%Z + 25%Y (3) 50%Z + 50%Y (4) 25%X + 75%Y (5) 100%Y (b) Graph your results (standard deviation on the X axis, Expected return on the Y axis). (c) Which of the portfolios in part (a) is not optimal? Explain. 3. Consider two assets A and B for which return distributions can be summarized as follows ,-2% What is the risk of the minimum risk portfolio composed of these two Stocks? (Hint: Use Solver in Excel to minimize ap2). Is the risk of the minimum risk portfolio below that of every constituent asset? What is the expected rate of return on the minimum risk portfolio? 4. Consider two other assets A' and B', which are identical (in statistical summary), respectively, to A and B above except that pAB-1. a. Draw the graph of the efficient frontier in this case b. Write down the answers to the same questions as in problem 3