Assume you hold an equally-weighted portfolio of N=100 stocks. (i.e. wi=N1=0.01 ). Variances of individual stock are the same and equal to 2=4. Assume all stocks are divided into two groups: group A stocks are from 1-50 and group B are from 51-100. Any pair of stocks from group A have pairwise covariances of 1 . Any pair of stocks from group B have covariance of 2 . Stocks from different groups are uncorrelated with each other. a) (10 points) Find contribution to total variance of your equally-weighted portfolio from stock variances b) (20 points) Find contribution total variance of your equally-weighted portfolio from stock covariances and calculate total variance of your portfolio