An investor can design a risky portfolio based on two stocks, A and B. The standard deviation of return on stock A is 24% while the standard deviation on stock B is 14%. The correlation coefficient between the return on A and B is 0.35. The expected return on stock A is 25% while on stock B it is 11%. The risk-free rate of return is 5%.

1. Draw the opportunity set of securities between A and B. Use investment proportions for the stock of 0 to 100% in increments of 25%.
2. Calculate the covariance between stock A and B.
3. Find minimum variance portfolio and its expected return and standard deviation.
4. Find the optimal risk portfolios expected return and standard deviation when %74 invested in stock A and 26% invested in stock B.
5. Find the slope of the CAL generated by T-bills and optimal risky portfolio.