Caleb is the chief investment manager for Irksome Investment Fund. The fund is composed of a risky

portfolio that is allocated between $2$ risky stocks. Caleb has $84\%$ of the risky portfolio invested in Joby

Aviation $($JOBY$)$ stock and $16\%$ of the risky portfolio invested in Harmonic, Inc. $($HLIT$).$ The stocks

have the following estimates of risk and return:

Expected Return Standard Deviation

JOBY $($Stock A$)$ E$($rA$)=0\mathrm{.}17\backslash$sigma A $=0\mathrm{.}14$

HLIT $($Stock B$)$ E$($rB$)=0\mathrm{.}22\backslash$sigma B $=0\mathrm{.}22$

Assume that the correlation coefficient $(\backslash$rho AB$)$ between JOBY and HLIT is equal to $0\mathrm{.}60$ and the risk$-$free

rate is currently $0\mathrm{.}033.$

$($a$)$ Calculate the expected return of Caleb$$s risky portfolio. Round your answer to $4$ decimal places.

$[3$ Points$]$

$($b$)$ Calculate the standard deviation of Caleb$$s risky portfolio. Round your answer to $4$ decimal

places. $[4$ Points$]$

$($c$)$ What is the optimal allocation of JOBY $($Stock A$)$ and HLIT $($Stock B$)$ in the risky portfolio? You

must show your work on how you derived your answer. $[10$ Points$]$