(a) Suppose that there are many stocks in the security market and that the characteristics of Stocks A and B are given as follows

Stock	Expected Return	Standard Deviation
A	10%	5%
B	15%	10%
	Correlation = -1

Suppose that it is possible to borrow at the risk-free rate, rf. What must be the value of the risk-free rate? Explain.

(b) Calculate the expected return and standard deviation of an equally weighted portfolio of Stock A, Stock B and the risk-free asset.