Question 1. Portfolio Analysis (2 points) a) Assume the following about assets A and B: E[r]=0.1, o =0.09. E[ra] -0.08, o; -0.04. Which one has lower absolute risk and which one has lower relative risk? (1): (2) b) Find the mean return, E[r], and variance, o. of a portfolio consisting of 70% of your total wealth invested in asset A (Wx=0.70), and 30% of your total wealth invested in asset B (w3= 0.30). The correlation between assets A and B (P.) = 0.25 c) Now assume that the correlation is -0.5. Use the information above to calculate the variance of this new portfolio. Explain how the riskiness of the portfolio changes