Part 1

w1 is .7273

W2 .2727

Part2

W1 .6480

W2 .3520

Im having trouble with part 3 I cant seem to get the E(r) and standard deviation (risk) of the optimal risky portfolio. Part 1 and 2 are confirmed as correct. Please help with part 3.

3. (10 points) You were given the opportunity to invest in two stocks (A and B) for your portfolio. You were told that the expected returns of A and B are 10% and 20%, respectively, and the risks of A and B are 20% and 40%, respectively. You know that the correlation coefficient between the two stocks is-04 and the risk-free rate is 3%. What would be your allocations (i.e. weights) in the two stocks if you want to put together a portfolio that: (i) (2 points) Provides you the lowest possible level of risk? Show your work. (i) (3 points) Provides you with the best risk and return trade off? Show your work. Suppose your investor's coefficient of risk aversion is 5. What would be your allocations (i.e. weights) in the risk- free asset and the two stocks if you want to put together a portfolio that: (iii) (5 points) Provides you the highest level of satisfaction? Show your work