Topic 3: Portfolio Theory with 2 Risky Assets 1. The expected returns and standard deviation of returns for two securities are as follows: Security Z Security Y Expected Return 15% 35% Standard Deviation 20% 40% The correlation between the returns is + .25. (a) Calculate the expected return and standard deviation for the following portfolios: i. all in Z ii..75 in Z and .25 in Y iii..5 in Z and .5 in Y iv..25 in Z and .75 in Y v. all in Y (b) Draw the mean-standard deviation frontier. (C) Which portfolios might be held by an investor who likes high mean and low standard deviation