Need help solving these questions as I am stuck.

1.Assume N securities. The expected returns on all the securities are equal to 0.01 and the variances of their returns are all equal to 0.01. The covariances of the returns between two securities are all equal to 0.005.

i.What are the expected return and the variance of the return on an equally weighted portfolio of all N securities? Please, note that the variance is presented by the formula, which depends on N.

ii.What value will the variance approach as N gets large?

iii.From parts (i) and (ii): Can you conclude what characteristic of the securities is most important when determining the variance of a well-diversified portfolio?

2.The returns on stocks A and B are perfectly negatively correlated().Stock A has an expected return of 21 % and a standard deviation of return of 40%. Stock B has a standard deviation of return of 20%. The risk-free rate of interest is 11 %. What must be the expected return to stock B?

3.Consider the situation of an insurance company which offers personal injury policies to professional hockey players. The typical payoffs to one of these policies are forecast to be the following:

State

Athlete is seriously injured Probability is 0.01 Payoff is -5,000,000

Athlete is not injured seriously. Probability is 0.99. Pay off is 60,000

What is the expected profit per policy? Assuming the returns are uncorrelated policy to policy, how many policies must be sold in order for the standard deviation of the firm's overall portfolio of injury policies to be below $10,000?