Question 3. (10 points) Consider the market with two stocks A and B. The current prices of both stocks are $100. After one year, the following 3 scenarios are equally likely to happen: (1) SA(1) = $120 and SB(1) = $120, (ii) SA(1) = $115 and SB(1) = $110, or (iii) SA(1) = $80 and SB(1) = $95. a) (3 points)Find the expected returns, the standard deviations of returns, and the correlation coefficient between the returns of the two stocks. b) (4 points) Find the minimum variance portfolio and a portfolio with expected return of 20%. c) (3 points) How does the answer to part (b) change if the stocks cannot be short-sold? Explain your answer. Question 3. (10 points) Consider the market with two stocks A and B. The current prices of both stocks are $100. After one year, the following 3 scenarios are equally likely to happen: (1) SA(1) = $120 and SB(1) = $120, (ii) SA(1) = $115 and SB(1) = $110, or (iii) SA(1) = $80 and SB(1) = $95. a) (3 points)Find the expected returns, the standard deviations of returns, and the correlation coefficient between the returns of the two stocks. b) (4 points) Find the minimum variance portfolio and a portfolio with expected return of 20%. c) (3 points) How does the answer to part (b) change if the stocks cannot be short-sold? Explain your