1. Suppose you invest equal amounts (50-50) in a portfolio with an expected return of 16% and a standard deviation of returns of 18% and a risk-free asset (i.e. a Treasury Bill) with an interest rate of 4%. Calculate the return and standard deviation of the returns on the resulting portfolio.
   1. Portfolio return = 16%; standard deviation of portfolio = 9%
   2. Portfolio return = 16%; standard deviation of portfolio = 18%
   3. Portfolio return = 10%; standard deviation of portfolio = 9%
   4. Portfolio return = 10%; standard deviation of portfolio = 14%