John's father holds just one stock, G Co., which he thinks is a very low risk security. John agrees that the stock is relatively safe, but he wants to demonstrate to his father that he could still reduce his risk by diversifying. He obtained the retum shown below on G and E Corp. Both have had less variability than most other stocks over the past years. Portfolio: 50% G and 50% E G 0. 400 -0.10 Year | 2015 2016 2017 2018 2019 Average retum Std devs 0.35 -0.05 0.15 0.15 0.2264 E .40 0.15 -0.05 -0.10 | 0.35 0.15 0.22264 a Measured by the standard deviation of returns, by how much would historical risk have been reduced if G and E were held in a portfolio consisting of 50% in G and the rest of the money in E? (Hint: this is a sample, not a complete population, so the sample standard deviation formula should be used. You can use excel or a calculator to complete the table above) b. Why is the risk reduced? T