Problem 1 Consider the following two stocks Sinoland and BCCW. According to your analysts, for Sinoland, its expected net return and standard deviation of net return are estimated to be 0.17 and 0.30 respectively. Meanwhile, for BCCW, its expected net return and standard deviation of net return are estimated to be 0.09 and 0.20 respectively. Your analysts also tell you that there is zero correlation between the net returns of Sinoland and BCCW. The risk-free interest rate is 2% per annum. Suppose that you are to invest 60% of your wealth in Sinoland and 40% of your wealth in BCCW. The beta of this portfolio is 1.3. (a) Compute the expected net return, as well as the standard deviation of the net return of such a portfolio. (b) What is the expected net return of the market portfolio? (c) Suppose you can now freely determine what fraction of your wealth to invest in Sinoland, what fraction to invest in BCCW and whatever remaining fraction to keep in a savings account (i.e. you are to create a portfolio consisting of the stock of Sinoland, the stock of BCCW, and cash in a savings account). You want na to achieve an expected net return of 0.06 for this portfolio Determine what fractions to put in the stock of Sinoland, in the stock of BCCW, and in the savings account respectively