You would like to invest your savings of 20,000 into a diversified portfolio of stocks. You have already identified two publicly listed companies and have collected the following information. Daisy Plc. has been operating in the pharmaceutical sector for over 30 years and its shares are expected to provide an annual return of 12.00%. The annual standard deviation of these returns is 6.00%. Blue Plc. is a relatively new company operating in the technology sector for the last 7 years. The following information is provided for Blue Plc.: State of the Probability of the state of Returns on Blue Plc. economy economy Poor 30% 5.00% Normal 50% 16.00% Growth 20% 25.00% You plan to invest your savings equally in both stocks and have found the correlation coefficient of their returns to be equal to 0.20. You are required to: a. Calculate the expected rate of return and standard deviation of returns on Blue Pla investment (10 marks) b. Calculate the expected rate of return and standard deviation of returns on the portfolio of investments in Blue Plc. and Daisy Plc. Explain your findings. (15 marks) c. You expect to receive a return of 13.00% on the two-stock portfolio. Estimate the standard deviation of returns on this portfolio and discuss your findings when compared with the results in part b. (18 marks) (up to 50 words) d. Assume that returns on both stocks are perfectly negatively correlated Estimate the expected rate of return and standard deviation of returns for the portfolio with equal investment in both stocks. (7 marks) Estimate the expected rate of return on the portfolio of these two stocks, when the standard deviation on portfolio returns is equal to zero. Briefly explain the role of diversification (18 marks) (up to 50 words)