Case 3. Risk and Return (20 points = 2 x 10) a. Picasso vs. Elvis. You are trying to choose between two investments. The first investment, a painting by Picasso, has an expected return of 14 percent with a standard deviation of 30 percent over the next year. The second investment, a pair of blue suede shoes once worn by Elvis, has an expected return of 20 percent with a standard deviation of return of 40 percent. The risk-free rate of interest is 3 percent. What is the way to determine which investment is a better investment? Explain and show your work. b. Choosing between Two Investments. You are trying to decide whether to invest in one or both of two different stocks. Stock 1 has a beta of 0.8 and an expected return of 7.0 percent. Stock 2 has a beta of 1.2 and expected return of 9.5 percent. Risk-free rate is 4 percent, and the market risk premium is 6 percent. Should you invest in either or both of these stocks? Explain and show your work