Benjamin Tang currently has holdings in the following three companies:

Vivian Tam & Yuanyuan Wang Technologies (X):

E(R) =14%

=16%

=2.0

Vivien Wang & Danny Dong Ltd. (Y):

E(R) =12%

=14%

=1.6

Omar Salahuddin & Philip Viegas Inc. (Z):

E(R) =10%

=11%

=1.2

Coefficient of Correlation

xy = -0.4

xz = 0.6

yz = -0.7

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a) What would be the expected return, standard deviation, and for the following portfolios:

Portfolio A - $20,000 in X and $30,000 in Y?

Portfolio B - $35,000 in Y and $15,000 in Z?

Which one is the better portfolio and why?

b) Assuming normal distribution, determine the range within which approximately 95% of the portfolio A's returns will fall?