a$.$ The inheritance changes Grace's overall portfolio and she is deciding whether to keep the ABC stock. Assuming Grace keeps the ABC stock, calculate the:

i$.$ Expected return of her new portfolio which includes the ABC stock. ii$.$ Covariance of ABC stock returns with the original portfolio returns. iii. Standard deviation of her new portfolio, which includes the ABC stock.

b$.$ If Grace sells the ABC stock, she will invest the proceeds in risk$-$free government securities yielding $\mathrm{.}42\%$ monthly. Assuming Grace sells the ABC stock and replaces it with the government securities$,$ calculate the

i$.$ Expected return of her new portfolio, which includes the government securities$.$ ii$.$ Covariance of the government security returns with the original portfolio returns. iii. Standard deviation of her new portfolio, which includes the government securities$.$

$$Determine whether the systematic risk of her new portfolio, which includes the government securities$,$ will be higher or lower than that of her original portfolio.

$$On the basis of conversations with her husband. Grace is considering selling the $$100\mathrm{.}000$ of ABC stock and acquiring $$100,000$ of XYZ Company common stock instead. XYZ