1. A portfolio manager is evaluating two investment options: Option A and Option B. Option A has an expected return of 12% and a standard deviation of 15%, while Option B has an expected return of 10% and a standard deviation of 10%. The correlation coefficient between the returns of Option A and Option B is 0.5. Calculate the expected return and standard deviation of a portfolio consisting of 60% Option A and 40% Option B. Assess the diversification benefits of combining these two investment options in the portfolio.