Question #2 (10 points) Consider the following two assets. Returns on azt I has a mean off and standard deviation of Returns om et 2 has a mean of and standard deviation cif 63. The correlation coefficient pu metres how the two exts' returns are correlated, and it takes on values between 1 and 11. An investor puts W, fraction of her wealth into stock 1, and W3 - 1 - W, fruction of her wealth into stock 2. 1. Using the equation on the standard deviation of portfolio returtes, arga: that the portfolio risk is in Cressing in 1.2 2. When 2-1, argue using mathematical formulas that the portfolio Standard deviation is equal to the weighted average of the standard deviation of the individual stods in the portfolio. (Ilint, Square of Summation). 3. Now suppose PL2-1. If the investor wants to minimize her risk in investing in this portfolio, bow should she choose Wand W.-1-W,? (Ilint, Square of Difference). Question #2 (10 points) Consider the following two assets. Returns on azt I has a mean off and standard deviation of Returns om et 2 has a mean of and standard deviation cif 63. The correlation coefficient pu metres how the two exts' returns are correlated, and it takes on values between 1 and 11. An investor puts W, fraction of her wealth into stock 1, and W3 - 1 - W, fruction of her wealth into stock 2. 1. Using the equation on the standard deviation of portfolio returtes, arga: that the portfolio risk is in Cressing in 1.2 2. When 2-1, argue using mathematical formulas that the portfolio Standard deviation is equal to the weighted average of the standard deviation of the individual stods in the portfolio. (Ilint, Square of Summation). 3. Now suppose PL2-1. If the investor wants to minimize her risk in investing in this portfolio, bow should she choose Wand W.-1-W,? (Ilint, Square of Difference)