In a particular market, the following assumptions apply:

Possibilities	Probability of outcome	Market returns	Yield on securities 1	Yield on securities 2
1	10%	5%	14%	10%
2	30%	7%	15%	8%
3	50%	10%	16%	6%
4	10%	20%	23%	3%

a) What is the expected return and standard deviation of each security?

b) What is the covariance between the market and securities 1 and 2?

c) What is the correlation between the market and securities 1 and 2?

d) What is the expected return and standard deviation of a portfolio that has 50% of holdings in securities 1 and 50% in securities 2?

e) What is the expected return and standard deviation of a portfolio that has 10% holdings in securities 1 and 90% in securities 2?

f) What is the expected return and standard deviation of a portfolio that has 90% holdings in securities 1 and 10% in securities 2?

g) What do the results from the above points indicate regarding risk diversification?

h) Calculate the beta () for securities 1 and 2 based on the stated assumptions.

i) Draw the result for these two properties, if possible.