The following information for three assets are given:

Stock Beta Expected Return Total Variance of Return

AAPL 1.2 14 0.005

MSFT 0.7 8.4 0.0018

PEP 0.5 7.3 0.008

i. If the variance of the return on the market is 0.0012, find the nonsystematic variance for each stock.

ii. Calculate the variance of a portfolio with an allocation of 100 in AAPL, 300 in MSFT, and 200 in PEP.