Your broker calls to tell you about three stocks he feels you should consider purchasing. He provides you with the following report: Beta Stock AA Stock BB Stock CC Expected Return 20% 14% 12% Std Dev of Returns 12 7 9 1.5 1.0 0.9 The correlation coefficients are as follows: Stock AAStock BB: 0.6 Stock AAStock CC: 0.35 Stock BB/Stock CC: 0.85 After reviewing this data, you decide that you only want to invest in two of the three stocks, Moreover, you will consider only three combinations of the three stocks. Portfolio (1) Portfolio (2) Portfolio (3) 45% in Stock AA 55% in Stock BB 50% each in Stock AA and 50% in Stock CC 25% in Stock BB, 75% in Stock CC Required: a) Calculate the expected returns and standard deviation of the three portfolios. Which portfolio is best using these criteria? If the risk free rate 7%, and the expected return on the market is 15%, would you purchase any of these stocks? Why or why not? b)