6. Two Asset Portfolio (a) The following annual returns have been determined for Easypet and British Grass. year REP RBG 2015 0.15 0.10 2016 0.05 0.05 2017 -0.15 0.10 2018 0.15 0.15 Calculate the average annual returns, risks, covariance and correlation coefficient (5 decimal places). [7 marks] (b) Now consider two stocks A and B with the risks and expected returns listed below. stock R A 0.100.10 B 0.20 0.15 Sketch three risk-return curves for the two-asset portfolios that can be constructed with correlation coefficients p = +1,0 and -1. Assume short selling not allowed. A simple qualitative sketch showing the main features is expected. [4 marks] (c) Assume a correlation coefficient p = 0.5 for this and part (d) below. What is the return and the risk of a portfolio with XA=0.2? [4 marks) (d) Construct a portfolio with a target return of 0.130. What are its invested fractions and risk? [5 marks] o