Let's assume you live in a world where there are only 2 risky assets, asset A and asset B. There is also a risk free asset. You have the following information about the assets: Let's assume the correlation between the returns of asset A and B is +1. Make a portfolio P1 that invests 50% in A and 50% in B. What's the expected return of portfolio P1? 15%20%10%17.5% QUESTION 2 What's the standard deviation of portfolio P1? 20%27.5%25%22.5% QUESTION 3 Which statement about P1 is true? You MAY prefer P1 to A. You prefer P1 to B. You are indifferent between P1 to A. You prefer P1 to A. QUESTION 4 Now assume that the correlation between the returns of asset A and B is zero. Make a portfolio P2 that invests 50% in A and 50% in B. What's the expected return on P2? 20%15%17.5%12.5% QUESTION 5 What's the standard deviation of P2 ? 15.8% 0 16.4% 14.6%