Stock X and Stock Z both have an expected return of 10%.The standard deviation of the expected return is 8% for Stock X, and 12% for Stock Z.Assume that these are the only two stocks available in a hypothetical world.

Assume that the correlation between the returns of the two stocks is +0.1.

What is the expected return and standard deviation of a portfolio containing 50% X and 50% Z?

What is the optimal amount of Stock Z for an investor to hold in a portfolio (if the correlation is +0.1)?