Question 2. Portfolio Analysis (2 points) a) Assume the following about assets A and B: E[ra] = 0.12 .04, E[ro] = 0.05 0.01. Which one has lower absolute risk and which one has lower relative risk? b) Find the mean return, E[r], and variance, op, of a portfolio consisting of 60% of your total wealth invested in asset A (WA=0.60), and 40% of your total wealth invested in asset B (WB= 0.40). The correlation between assets A and B (PAB) = 0.25 c) Now assume that the correlation is -0.5. Use the information about to calculate the variance of this new portfolio. Explain how the riskiness of the portfolio changes