Stock A has an expected return of 17.8 percent, and Stock B has an expected return of 9.6 percent. However, the risk of Stock A as measured by its variance is 3 times that of Stock B. If the two stocks are combined equally in a portfolio, what would be the portfolio's expected return? My understanding is that the right answer is 13.7% derrived from the calculation 0.5 x 17.8% + 0.5 9.6%. Why does the variance not have any impact to the solution?