The following questions are related to modern portfolio theory.

Assume there are only two stocks in the equity market.

The risk-free rate is 1.00%.

Stock	Return	Volatility	Correlation Matrix X	Correlation Matrix Y
X	15%	20%	1.0	0.7
Y	10%	15%	0.7	1.0

(a) Make an investment portfolio using the risky assets that has an expected return 12%. [5]

(b) Calculate the volatility of the portfolio in (a). [5]

(c) Calculate the composition of the market portfolio. [10]

(d) Construct, using the risk-free asset, the minimum variance portfolio that has an expected return 12%.