Consider the following two risky asset worlds:

	Security S	Security B
Expected return	0.16	0.10
Variance	0.0735	0.0563
Beta B=	1.2	0.9
Treasury bond rate	4%
Market return Rm =	9%
coefficient of Correlation: P(A,B)=	-0.005

Answer the following questions:

1. Explain why the risk of any portfolio composed of (S) and (B) is less than weighted average risk of the two securities
2. Calculate the expected return and the variance of a portfolio composed of (60%: S, 40%: B)
3. If the minimum variance portfolio of the two securities is (43.41%: S, 56.59%: B), what is the expected return and the variance of this portfolio?