Given two stocks with E(r1) = 10%, E(r2) = 12%, 1 = 18%, 2 = 22%. Calculate the expected returns and standard deviations of a two-stock portfolio under each of the following conditions:

(a) w1 = 0.80, w2 = 0.20, = 0.6; (5 marks)

(b) w1 = 0.60, w2 = 0.40, = 0; (5 marks)

(c) w1 = 0.20, w2 = 0.80, = 0.6. (5 marks)

Here wi is the weight of stock i in the portfolio, is the correlation between the two stock returns. Total: 15 marks.