You have combined two stocks, ABC and DEF, into an equally weighted portfolio (Stable) and it has a variance of 35%. The covariance between ABC and DEF is 25%. ABC is a resource stock and has a variance twice that of DEF. 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 (ABC,Market) = 22% and Covariance (DEF,Market) = 15.5% and the variance of the Market is 15%. Required: i. What is the variance of ABC? ii. What is the correlation of ABC with DEF? iii. Is your Stable portfolio efficient? Explain. (3 marks) (2 marks) (2 marks)