Stock A has an expected return of 10%, while Stock B has an expected return of 20%. Stock A has a standard deviation of return of 12% while stock B has a standard deviation of return of 30%.

A. What will be the expected return of a portfolio composed of 50% Stock A and 50% Stock B?

B. What will be the standard deviation of a portfolio composed of 50% Stock A and 50% Stock B?

When risk reduction may be achieved by diversification? Please provide a range.

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