Mahir Mahir wishes to evaluate the risk and return behaviors associated with various combinations of assets V and W under three assumed degrees of correlation: perfect positive, uncorrelated, and perfect negative.
The expected return and risk values calculated for each of the assets are shown in the following table.

Asset Expected return, r Risk (standard deviation), σr
V...............................8%................................................................5%
W..............................13...................................................10
a. If the returns of assets V and W are perfectly positively correlated (correlation coefficient = +1), describe the range of (1) expected return and (2) risk associated with all possible portfolio combinations.
b. If the returns of assets V and W are uncorrelated (correlation coefficient = 0), describe the approximate range of (1) expected return and (2) risk associated with all possible portfolio combinations.
c. If the returns of assets V and W are perfectly negatively correlated (correlation coefficient = -1), describe the range of (1) expected return and (2) risk associated with all possible portfolio combinations.

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Expected return, r Risk (standard deviation), σ, Asset 8% 13 5% 10