Assume the following information for two stocks, A and B, and a risk-free asset. Expected Standard Correlation Return Deviation beta Stock A Stock B Stock A 10% 14% 1.4 1 0.4 Stock B 7% 19% 0.8 1 Risk-free asset 3% 0%(a) Suppose you have a portfolio with investment of $200 in stock A, $400 in stock B, and $400 in the risk-free asset. Compute the expected return and standard deviation of this portfolio. {5 marks) (b) Consider a portfolio that consists of only stocks A and B (but not the risk-free asset). If the expected return of this portfolio is 8%, what is the amount invested in Stock A? {2 marks) (c) Explain why investing in a portfolio with both Stocks A and B is more preferable than investing in either Stock A, or Stock B only. Provide TWO reasons. (4 marks) (d) Suppose the market portfolio return is 8%. Draw the security market line (SM L) on a graph with clear labels on X and Y axis. You must plot the values of the equation ofthe line on the axis. (4 marks) (e) Determine where Stock A and Stock B lies on the graph of SM L and whether they are correctly priced, uncle rpriced or overpriced. (6 marks)