Question: (a) Explain why assets must be evaluated in a portfolio context? (120 to 150 words) (10 marks) (b) Determine the expected return and standard deviation

(a) Explain why assets must be evaluated in a portfolio context? (120 to 150 words) (10 marks) (b) Determine the expected return and standard deviation of a portfolio that consists of 60% of Security A (expected return of 0.10 and standard deviation of 0.03) and 40% of Security B (expected return of 0.20 and standard deviation of 0.05), assuming the correlation between A and B is -0.8. Show your working clearly. (10 marks) Comment on the risk and return on the portfolio as compared with those of the individual securities. (120 to 150 words) (10 marks)

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