1. You place $75,000 in Stock A and $25,000 in Stock B and hold the portfolio for one year. Stock A's return is 12% and Stock B's return is 8%. What is the expected return on your portfolio?

2. Consider the following information about three stocks (A, B, and C): all have the same return variance; correlation (A,B) = .65; correlation (A,C) = -.10; correlation (B,C) = 0. Which of the following portfolios will have the lowest return variance:
   1. half in A and half in B
   2. half in A and half in C
   3. half in B and half in C?

3. Stock A has expected return of .11 and return variance of .02. Stock B has expected return of .10 and return variance of .03. The return correlation between Stock A and B is .15.
   1. Find the expected return of a portfolio consisting of $20,000 in Stock A and $60,000 in Stock B.
4. 2. Find the return standard deviation for the portfolio described in part a.