3. Consider the following data: Share Price 10 Name Stock 1 Stock 2 Stock 3 20 Expected Return 14% 8% 10% Volatility 20% 10% 15% The correlation of Stock 1 and Stock 2 is 0.3, while the correlation of Stock 1 and Stock 3 is 0.5. The covariance between Stock 2 and Stock 3 is 0.004. a. Estimate the price of Stock 1 for next year. b. What is the correlation between Stock 2 and Stock 3? c. An investor holds a retirement portfolio of $30,000 of Stock 1 and $70,000 of Stock 2. Calculate the expected return and the volatility of the portfolio. d. An investor holds a portfolio consisting of 200 shares of Stock 1 and 25 shares of Stock 2. i) Calculate the expected return and the volatility of the portfolio. ii) What is the correlation of the portfolio with Stock 3? e. Portfolio Manager 1: "No one would ever buy Stock 3. Investors could purchase Stock 1 instead and have a higher expected return." Evaluate. f. Portfolio Manager 2: "No one would ever buy Stock 3. Investors could always purchase a portfolio of half Stock 1 and half Stock 2 that yields a higher expected return and a lower volatility." Evaluate