7. Consider two assets, A and B, which have the following means and variances:

Now consider three cases:

Graph the combinations of portfolio means and variances for each case. (Graphs like these appear in virtually all elementary finance books. The standard deviation usually appears on the x-axis and the portfolio mean return on the y-axis. In this case, if you want to put all three graphs on the same set of axes, you will have to reverse this arrangement or use a trick.)