Charlie Strong is trying to choose the best two$-$asset security portfolio between two alternatives.

His decision will be based on the information provided by Atlas Financial Inc., which predicts

the following rates of return on three different securities over the next year.

NOTE: For every two$-$security portfolio, Charlie would invest $50\%$ of his investment budget in

one security and the remaining $50\%$ in the other security. $[$For accurate results use at least $3$

decimals, e$.$g$.,30\mathrm{.}125\%$

Given the table above, determine:

$2\mathrm{.}1$ The expected return for

$2\mathrm{.}1\mathrm{.}1$ Alternative $1.$ Specifically, $E(R_A),E(R_B)$ and also $E(R_P),$ where $E(R_P)$ is the

expected return on the two$-$security portfolio for this alternative. $[6$ points$]$

$2\mathrm{.}1\mathrm{.}2$ Alternative $2.$ Specifically, $E(R_C)$ and $E(R_P),$ where $E(R_P)$ is the expected return

on the two$-$security portfolio for this alternative $($i$.$e$.,$ security A and security $C).[4$ points$]$

$2\mathrm{.}2$ The standard deviation of returns, covariance, and correlation for:

$2\mathrm{.}2\mathrm{.}1$ Alternative $1.$ Specifically, the ${}_A,{}_B,{}_{AB},{}_{AB}$ and ${}_p$

Where, ${}_p$ is standard deviation of the two$-$asset portfolio; ${}_{AB}$ is the covariance of return between

securities A and $B$; and ${}_{AB}$ is the correlation coefficient between securities A and $B.[10$ points$]$

$2\mathrm{.}3$ What is the reward to variability ratio of each $2-$asset portfolio $($i$.$e$.,$ alternatives $1$ and

$?[6$ points$]$

$2\mathrm{.}4$ Which of the two alternative portfolios should Charlie invest in over the next year? Why?

Also, summarize your results in the table below. $[4$ points$]$

Summary Table