Instructions: Show step-by-step calculations. Carry your calculations to the 4th place after the decimal point. The homework is due at 8 am on February 21. Late submission will not be accepted. You have the following information regarding rates of return for two stocks, B and C: Rate of Return (%) Probability Stock B Stock C 0.1 15 15 10 5 0.4 30 15 0.4 0.1 20 25 1 Wb 0.0 0.1 09 WN 6 7 9 Suppose you want to construct the following portfolios with stocks B&C: Portfolio Wc Expected rate of return Standard deviation 1.0 0.9 3 0.2 0.8 0.3 0.7 S 0.4 0.6 0.5 0.5 0.6 0.4 8** 0.7 0.3 0.8 0.2 10 0.9 0.1 11 1.0 0.0 Put the answers above and attach the step-by-step solutions. Portfolio #2 consists of stocks B and C. The weight of stock B (Wb) in your portfolio is 10% and the weight of stock C (We) is 90%. ** Similarly, portfolio #8 consists of stocks B and C. The weight of stock B (Wb) in your portfolio is 70% and the weight of stock C (WC) is 30%. 1. Calculate the expected rate of return and the risk (standard deviation) of each of the above 11 portfolios. 2. Plot the above 11 portfolios in the risk-return space. Note that the y-axis is expected rate of return and (5.5 points) x-axis is standard deviation. Each portfolio will be a point in the risk-return space. Join all those points to draw the graph. Check panel c of figure 3-2 on page 116 of your textbook. You can use EXCEL to plot the graph. (2 points) 3. Suppose you want to construct the minimum-risk (minimum-variance) portfolio with stocks B&C. Calculate the expected rate of return and the risk (standard deviation) of the minimum-risk portfolio. (3.5 points)