Consider the following probability distribution for stocks A and B.

Scenario	Probability	Return on Stock A	Return on Stock B
1	.35	12%	-15%
2	.4	4%	5%
3	.25	-4%	25%

1. What are the expected returns and standard deviations for stocks A and B?

2. What is the correlation coefficient between the two stocks?

3. Suppose the risk-free rate is 2%. What is the optimal risky portfolio, its expected return and its standard deviation?

4. Suppose that stocks A and B had the expected return and standard deviations as you calculated in question 1, while being perfectly negatively correlated. Again, assume the risk-free rate is 2%. Describe the global minimum variance portfolio in this case (that is, the proportions (w_E, w_D), the expected return and standard deviation).