Assume that the standard deviation of security A is 3% and that the standard deviation of security B is 7%. The correlation coefficient between A and B is 0.5. The expected return from security A is 10% and that of security B is 15%

a)What is the expected return of a portfolio composed of 33% in security A and the balance in security B?

b) What is the standard deviation of the return on the portfolio, given the portfolio's asset allocation in part a)?

c) From a risk-return tradeoff perspective, which asset has the least risk, given its expected return: Asset A, B, or the portfolio? Explain.