Question: 20. You have been given this probability distribution for the return of Apple (AAPL). Probability Rate of Return 0.5 30% 0.5 10% a. What are

20. You have been given this probability distribution for the return of Apple (AAPL). Probability Rate of Return 0.5 30% 0.5 10% a. What are the expected return and the standard deviation of AAPL? (7

20. You have been given this probability distribution for the return of Apple (AAPL). Probability Rate of Return 0.5 30% 0.5 10% a. What are the expected return and the standard deviation of AAPL? (7 points) b. Suppose the expected return and standard deviation of Amazon (AMZN) is 10% and 5%. The correlation between AAPL and AMZN is 0.71. And the optimal risky portfolio, P*, comprising of AAPL and AMZN, is investing 50% in each. What is the optimal risky portfolio's expected return and standard deviation? (11 points) c. Assume that you have a risk aversion parameter A = 4 and the risk-free rate is 8%. What is your optimal investment in P*? (4 points)

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