Next, consider a two-asset portfolio consisting of stock A with wA = 10% and an expected return rA = 8% and a standard deviation of A = 10%, and stock B with rB = 11% and B = 4%. Assuming that the correlation between stocks A and B is AB = 0.75, the expected return to the portfolio is ____ , and the portfolios standard deviation is______ .

Suppose that the correlation between stocks A and B is AB = 1, instead of AB = 0.75. Which of the following statements correctly reflects the new data?

___The risk associated with the portfolio is the same as when the correlation is AB = 0.75.

___The expected return to the portfolio is higher.

___The risk associated with the portfolio is lower.

___The risk associated with the portfolio is higher.