We consider a portfolio P composed of 45% of Security A and 55% of Security B. Security A has an expected return of 14% and a standard deviation of 21%. Security B has an expected return of 21% and a standard deviation of 30%. Furthermore, we suppose that the correlation coefficient between Security A and Security B is 0.3 and the risk-free rate 6%.

1. What is the expected return, noted E(R_P), of the portfolio? (1 point)

2. What is the risk, noted s_P, of the portfolio? (1 point)

3. What is the Sharpe Ratio of the portfolio P? What can you comment when comparing it with the Sharpe ratios of A and B? (1 point)