Asset X has standard deviation of 0.25, Asset Y has standard deviation of 0.35, and the two have a correlation coefficient of 0.50.Asset O has a standard deviation of 0.35, Asset P has standard deviation of 0.25, and the two have a correlation coefficient of 0.60. All four assets have the same expected return.

If portfolio XY fund has 50% of its investment in X and the rest and Y, and portfolio OP fund has 50% of its investment and O and the rest in P, which portfolio should all risk-adverse investors prefer? (Please note that if you are calculating the variance or standard deviation of both portfolios, you are doing unnecessary calculations and taking too much time you may want to find an alternative method of finding the answer).

a.Investors should prefer XY fund.

b.Investors should prefer OP fund.

c. It depends on whether the investor is very risk adverse or only slightly risk-averse.