Suppose Target's stock has an expected return of $19\%$ and a volatility of $36\%,$ Hershey's stock has an expected return

of $14\%$ and a volatility of $23\%,$ and these two stocks are uncorrelated.

a$.$ What is the expected return and volatility of an equally weighted portfolio of the two stocks?

Consider a new stock with an expected return of $17\%$ and a volatility of $30\%.$ Suppose this new stock is uncorrelated

with Target's and Hershey's stock.

b$.$ Is holding this stock alone attractive compared to holding the portfolio in $($a$)?$

c$.$ Can you improve upon your portfolio in $($a$)$ by adding this new stock to your portfolio? Explain.