Given:

	E(R1) = 0.12
	E(R2) = 0.16
	E(1) = 0.04
	E(2) = 0.05

Calculate the expected returns and expected standard deviations of a two-stock portfolio having a correlation coefficient of 0.75 under the conditions given below. Do not round intermediate calculations. Round your answers to four decimal places.

1. w₁ = 1.00

   Expected return of a two-stock portfolio:

   Expected standard deviation of a two-stock portfolio:

2. w₁ = 0.75

   Expected return of a two-stock portfolio:

   Expected standard deviation of a two-stock portfolio:

3. w₁ = 0.45

   Expected return of a two-stock portfolio:

   Expected standard deviation of a two-stock portfolio:

4. w₁ = 0.25

   Expected return of a two-stock portfolio:

   Expected standard deviation of a two-stock portfolio:

5. w₁ = 0.10

   Expected return of a two-stock portfolio:

   Expected standard deviation of a two-stock portfolio:

Choose the correct riskreturn graph for weights from parts (a) through (e) when r_i,j = -0.75; 0.00; 0.75.

The correct graph is -Select-graph Agraph Bgraph Cgraph DItem 11 .

A. FE(R) -0.18 0.17 -0.16 E D +0.15 D D C. C +0.14 CA B . +0.13 B F0.12 10.11 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 Standard Deviation of Return () == 1.2 =0.75 1=0.00 1.2 '12 0.75 B. FER) F0.18 10.17 10.16 +0.15 E +0.14 D U C +0.13 10.12 B . 00 10.11 A 0.01 -0.02 -0.03 0.04 0.05 0.06 0.07 0.09 Standard Deviation of Return C. FE(R) F0.18 10.17 F0.16 EE D E D D 10.15 C C 10.14 -0.13 B . B 10.12 A F0.11 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 Standard Deviation of Return) 0.75 '12 +0.75 (12=0.00 D. [E(R) F0.18 0.17 10.16 E EE 10.15 D D D C U 10.14 10.13 B B B F0.12 A F0.11 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 Standard Deviation of Return