3. You would like to combine the following two stocks into a portfolio in order to save for retirement. The two stocks had the following historical returns: [24 points = 6 points each] iGarden Realized Home Repot Realized Year-End Return Return 2000 -8.00% 32.00% 2001 26.00% -15.00% 2002 12.00% 42.00% Average E[R] 10.00% 19.67% Standard Deviation 17.09% 30.44% You want your portfolio to have an expected return of 15%. There are no other stocks available in which to invest. a. How would you allocate your money across the two stocks to have an expected return of 15%? Hint: Find the weight for each stock in the portfolio; w + W = 100%. b. What is the covariance of the two assets? c. What is the standard deviation of your portfolio? d. Please explain briefly how the portfolio standard deviation is lower than the individual standard deviation of each stock