You have combined two stocks, A and B, into an equally weighted portfolio (Stable) and it has a variance of 35%. The covariance between A and B is 25%. A is a resource stock and has a variance twice that of B. You have formed another portfolio (Growth) that has an expected return of 17% and a variance of 50%. The expected return on the market is 15% and the risk free rate is 7% Covariance (A,Market) = 22% and Covariance (B,Market) = 15.5% and the variance of the Market is 15%.

What is the variance of B?

What is the variance of A?

What is the correlation of A with B?

What is the correlation of Stable portfolio with the Market?

Is your Stable portfolio efficient?