2. Two assets P and Q have the following statistical properties: E (rp) = 10%, up = 10%, E(rq) = 15%, (IQ = 25%. The riskfree rate of interest (on bills) is 5%, and borrowing is not possible. An investor with preferences given by U = E(r) $1402, can combine bills with either P or Q but not both. (a) Explain why this investor would never combine bills with Q unless the weight in Q were greater than one-half. Use the standard deviation-expected return diagram. (b) Consider a riskneutral investor (A = 0). Which portfolio would he prefer? Within that portfolio, what would be the share of the riskfree asset? Show your solution on the a E(r) diagram. (0) Consider a risk-averse investor (A > 0). For which values of A would the investor combine bills with