(Please Use Excel and show all the work and formulas)

Stacy is interested in putting together a portfolio that is limited to only 2 securities (with an equal proportion of money invested in each). The following is the information of the 3 securities that Stacy is interested in:

1. Calculate the expected return for a portfolio containing (i) securities A and B, (ii) securities A and C, and (iii) securities B and C. Show your work.

2. Calculate the standard deviations for a portfolio containing (i) securities A and B, (ii) securities A and C, and (iii) securities B and C. Show your work.

3. Suppose Stacy's objective is to minimize her risk exposure. How should she change the compositions of the above three portfolios in order to meet her objective? Show your work. Hint: Calculate, using the appropriate formula, the proportions (weights) invested in the two assets in each portfolio that will meet her objective.

Security A B Expected Return 8.2% 9.4% 7.2% Standard Deviation 1.3% 1.5% 0.9% In addition, the correlation table presents the correlation coefficients for all the different pairs of securities: Securities A & B A&C B&C Correlation 0.60 -0.75 0.10