You are considering investing in two stocks. There are two possible states for the economy over the next year: 'Good' and 'Bad'. Each state is equally likely (that is, probability for each state is 50% ). Their return in each possible state is estimated as follows: (a) What are the expected return and volatility of each stock return? (b) What are the covariance and correlation between the two stock returns? (c) Construct the minimum variance frontier that is possible by investing in these two stocks (assume no short selling). (d) Suppose that a risk free rate of 5% is for borrowing or lending. Can you construct a portfolio with no risk and a return greater then the risk free rate? Explain. You are considering investing in two stocks. There are two possible states for the economy over the next year: 'Good' and 'Bad'. Each state is equally likely (that is, probability for each state is 50% ). Their return in each possible state is estimated as follows: (a) What are the expected return and volatility of each stock return? (b) What are the covariance and correlation between the two stock returns? (c) Construct the minimum variance frontier that is possible by investing in these two stocks (assume no short selling). (d) Suppose that a risk free rate of 5% is for borrowing or lending. Can you construct a portfolio with no risk and a return greater then the risk free rate? Explain