Stock A has an expected return of $12$ percent and a standard deviation of $14$ percent. Stock B has an

expected return of $15$ percent and a standard deviation of $16$ percent. The correlation between them is $0\mathrm{.}4.$

Portfolio Percentage in A Percentage in B

$12575$

$25050$

$37525$

b$)$ Calculate the expected return and the standard deviation for the minimium variance portfolio. c$)$ If the risk$-$free rate is $8\%,$ which one of the portfolios is the market portfolio

according to the CAPM? $($Which portfolio has the hightes Sharpe ratio?$)$ D$)$Base on your calculations above, draw the portfolio frontier, indicate the effient portfolios, and add

the Capital Allocation Line $($CAL$)($Capital Market Line $($CML$)).$