Answer the following questions: (a) What is the correlation coefficient between two stocks that gives the maximum reduction in risk (variance) for a two-stock portfolio (assuming that the portfolio contains long positions in both stocks)? (b) Historical nominal annual returns for stock A are -8%, +10% and +22%. The nominal returns for the market portfolio in the same years are +6%, +18% and +24%. Calculate the beta for stock A. (c) The correlation coefficient between stock B and the market portfolio is 0.8. The standard deviation of stock B is 35% and that of the market is 20%. Calculate the beta of the stock. 2