Ali is considering investing in a security A that has the following distribution of possible one-year returns:

Probability Returns

0.10 -0.10

0.20 0

0.25 0.10

0.30 0.4

0.15 0.45

a. Find expected return of the investment

b. Find standard deviation of the investment

c. If Ali invests half his money in Security A with above distribution and half in Stock B (Security B has expected return of 10%). Calculate portfolio return.

d. If Ali invests half his money in Security A with above distribution and half in Stock B (Security B has risk of 8%) and both have 0.15 correlation coefficient. Calculate portfolio risk.