Question 2 (18 marks) (a) Given the following two securities MSC and APP. You consider buying these two securities to form a portfolio: Probability 0.3 0.4 0.3 Return (RMSC) -5% 8% 12% Return (RAPP) 15% 10% -8% (i) Compute covariance of the portfolio. (7 marks) (ii) Compute standard deviation of the portfolio if you invest RM180,000 into MSC and RM220,000 into APP. (5 marks) (b) Theoretically, justify how the maximum level the standard deviation of a portfolio can be reduced to. Realistically, explain is it possible to reduce the standard deviation to this level. (6 marks)