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Question 3) Suppose that there are two assets with = 0.12, 72 = 0.15, 01=0.20, 02 = 0.18, and 012 = 0.01. A portfolio is

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Question 3) Suppose that there are two assets with = 0.12, 72 = 0.15, 01=0.20, 02 = 0.18, and 012 = 0.01. A portfolio is formed with weights wi= 0.25 and w2 = 0.75. a) Calculate the expected rate of return of portfolio. (8p.) b) Calculate the variance of portfolio return. (12p.)

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