Consider two assets, X and Y, with expected returns X = 17% and Y = 13% and with standard deviations X = 9% and Y = 6% for those returns. The two assets have a correlation, , of -0.75. a. What is the covariance of the returns of stocks X and Y? (Hint: compute the covariance using the definition of the population correlation ) In general, will constructing a portfolio from these two stocks reduce or increase the risk compared to the individual stocks? Briefly explain. b. What is the expected return and standard deviation of a portfolio made up of stocks X and Y which is 20% stock X (the remainder stock Y)? c. What is the expected return and standard deviation of a portfolio made up of stocks X and Y which is 50% stock X (the remainder stock Y)? d. What is the expected return and standard deviation of a portfolio made up of stocks X and Y which is 80% stock X? e. Which of the portfolios above, either (b), (c), or (d), offers the best combination of risk and return? Briefly explain.