Do exercise 4 only, showing all the calculations please.

Compute the return and risk of portfolios made up of the following two seurities if a) corr is +1 b) corr is -1 c) corr is 0.7. Assume that you have $8,500 to invest, and you invest $4,000 in A and $4,500 in B. Security A has an expected return of 10% and a standard deviation of 15% Security B has an expected return of 16% and a standard deviation of 25% Plot the three protfollos on a graph. Answer: r_P = 13.18% standard deviation -20.3,6.2 and 18.87 3. Compute the return, risk and coefficient of variation for the following securities: Compare the two securities in terms of their risk and return. Answer: r_A = 18%; r_c = 29%; standard deviation of A = 6.78%; standard deviation of C = 9.7%; Cv of A = 0.38; Cv of C = 0.33 4. You have $25000 of your personal funds to invest. Your broker allows you to use margin trading of 50%. that is, you can borrow money from the broker up to an amountwhere the borrowed funds is a maximum of 50%. You invest in GE stock which is currently priced at $25. The broker charges an interest on the margin loan of 1% of the borrowed amount. a) Suppose the GE stock rises to $28 per share. Compute your proft and return using no margin and using the maximum margin. (Answer: 12%; 23%) b) Suppose the GE stock falls to $23 per share. Compute your profit and return using no margin and using maximum margin. (Answer: -8%: -17%) 5. The std deviation of the ma*et is 14%. The std deviation of stock X is 26%. Stock X has a correlation coefficient of 0.8 with the market. Find the beta for stock X.(Answer: 1.49)