The annual rate of return on the market portfolio has been 12.0%, 24.0%, and 0.0%.

The annual risk-free rate of return has been 4.0%, 4.0%, and 4.0%.

The annual rate of return on stock X has been 11.0%, 18.0%, and 4.0%.

The annual rate of return on stock Y has been 8.0%, 14.0%, and 11.0%, implying an expected return of 11.0% and a standard deviation of 2.45%.

(a) What is the expected return and standard deviation of return for X?

(b) What is the expected return and standard deviation of a portfolio that invests $300,000 in X and $100,000 in Y?

(c) Based on the mean-standard deviation rule, would you prefer to invest $400,000 in Y or to invest $300,000 in X and $100,000 in Y? Briefly explain your answer.