1. Use the following information to answer the questions.

Variance-Covariance matrix
	Stock H	Stock I	Stock J
Stock H	0.010
Stock I	0.003	0.090
Stock J	0.020	0.045	0.250

You form two portfolios. You form Portfolio Aby investing $4,000 in Stock H and $6,000 in Stock I while you form Portfolio Bby investing $7,000 in Stock I and $3,000 in Stock J.

1. Given the expected returns of 0.04, 0.06, and 0.08 for Stocks H, I, and J respectively, Figure out the expected return for Portfolios A and B.
2. Figure out the variance for Portfolios A and B.
3. Given the risk-free rate of 0.02, figure out the Sharpe ratiofor Portfolios A and B. Which portfoliois better based on the Sharpe ratio?