You are planning to invest the RM200,000 that you received from your parents. You are considering two securities, Security A and Security B. You can invest in either of them, or to create a portfolio with some of each. As a risk averse investor, you are willing to accept higher risk if the investment gives you higher return. You estimate that the following probability distributions of returns are applicable for the securities, depending on the states of the economy: States of the Economy Boom Steady Bust Probabilities of States of the Economy 20% 50% 30% Expected Return Security A 12% 10% 7% Security B 20% 10% 2% Required: a) Suppose you want to invest in either of the two securities. Which one should you invest in? Support your answer with calculations. Keep your answers to three decimal places. (6 marks) b) You are deliberating to create a portfolio with equal investment in the securities. You were informed that the correlation coefficient between the returns of the two securities is 0.2. Should you invest only in one security, or should you create a portfolio? Support your answer with calculations.