Assume stocks A and B have the following characteristics:

Stock	Expected return	Standard deviation
A	10	45
B	12	35

The covariance between the returns on the two stocks is 0.02

1. Suppose the investor holds a portfolio consisting of only stock A and B. Find the portfolio weights, XA and XB, such that the variance of this portfolio is minimized. (6 marks)
2. What is the expected return on the minimum variance portfolio (3 marks)
3. If the covariance between the returns on the two stocks is -0.015, what are the minimum variance weights? (6 marks)