An investor is evaluating a two-asset portfolio of the following securities:

Google (US): expected return 18.6%; expected risk (sigma) 22.8%;

Vodafone (UK): expected return 16%; expected risk (sigma) 24%;

Correlation (rho) 0.60; Risk free rate is 1.5%

a) If the 2 securities have a correlation of +0.60, what is the expected risk and return for a portfolio that is equally weighted?

b) If the 2 securities have a correlation of +0.60, what is the expected risk and return for a portfolio that is 70% Google and 30% Vodafone?

c) Which of the two portfolios above (a or b) is better? Explain