Question 2 (20 points): The average return for Firm A is calculated as 0.05 (5%) with a standard deviation of 0.03. The average return for Firm B is calculated as 0.15 (15%) with a standard deviation of 0.06. The covariance between returns in Firms A and B is equal to -0.0005. The return on the risk-free asset is 1%. a) Fill in the table below. Share in Firm A Share in Firm B Portfolio Expected Return Portfolio Standard Deviation Sharpe Ratio 100% 0% 5.00% 3.00% 80% 20% 50% 50% 20% 80% 0% 100% 15.00% 6.00% b) Plot the portfolio frontier on the graph of standard deviation vs. expected return. Identify the point that maximizes the Sharpe Ratio, and note that point on your graph. Question 2 (20 points): The average return for Firm A is calculated as 0.05 (5%) with a standard deviation of 0.03. The average return for Firm B is calculated as 0.15 (15%) with a standard deviation of 0.06. The covariance between returns in Firms A and B is equal to -0.0005. The return on the risk-free asset is 1%. a) Fill in the table below. Share in Firm A Share in Firm B Portfolio Expected Return Portfolio Standard Deviation Sharpe Ratio 100% 0% 5.00% 3.00% 80% 20% 50% 50% 20% 80% 0% 100% 15.00% 6.00% b) Plot the portfolio frontier on the graph of standard deviation vs. expected return. Identify the point that maximizes the Sharpe Ratio, and note that point on your graph