A portfolio has $15,000 of its funds invested in Security One and $45,000 of its funds invested in Security Two. Security One has an expected return of 14% and a standard deviation of 18%. Security Two has an expected return of 8% and a standard deviation of 7%. The securities have a correlation of .5.

a) what is the expected return of the portfolio (2 marks)

b) what is the standard deviation of the portfolio (3 marks)

c) if the investor wants to reduce risk further, what can she do? (2 marks