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Consider the following information about the expected return and volatility of Microsoft and Walmart Stock: Expected Return Microsoft: 1 0 % Volatility Microsoft: 2 0

Consider the following information about the expected return and volatility of Microsoft and Walmart Stock:
Expected Return Microsoft: 10%
Volatility Microsoft: 20%
Expected Return Walmart: 12%
Volatility Walmart: 30%
Correlation between Microsoft and Walmart: 1/2
Risk Free Rate: 3%
a)(6 pts) What is the volatility of an equally weighted portfolio of Microsoft and Walmart.
b)(4 pts) What is the Sharpe Ratio of an equally weighted portfolio of Microsoft and Walmart.
c)(5 pts) In one or two sentences, explain why the Sharpe Ratio of an equally weighted portfolio of Microsoft and Walmart is greater than the Sharpe Ratio of Microsoft alone.

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