Question $6[15$ points$]$ George Costanza has invested $70\%$ of his money in stock A and the $30\%$ in stock B$.$ He accesses their prospects as follows: Stock A Stock B Expected return $8\%12\%$ Standard deviations $15\%17\%$ Beta $1\mathrm{.}11\mathrm{.}5$ Correlation between returns $0\mathrm{.}25$ a$)$ What are the expected return of his portfolio? b$)$ What is the standard deviation of his portfolio? c$)$ Is Mr$.$ Costanza better or worse off investing in the portfolio than investing entirely in stock A$,$ or is it not possible to say? Explain your answer. d$)$ What is Mr$.$ Costanza's portfolio beta? e$)$ Mr Costanza's friend, Elaine wants to invest in one stock and one stock only. Which stock represent a less risky investment for her, stock A or stock B$,$ and why? $1$ :) George's other friend, Jerry, wants to one more stock to his portfolio of $50$ stocks Between stock A and B which one represents a less risky addition for Jerry and why?Current Attempt in Progress

You must choose between investing in Stock A or Stock B$.$ You have already used CAPM to calculate the rate of return you should

expect to receive for each stock given each one's systematic risk and decided that the expected return for both exceeds that predicted

by CAPM by the same amount. In other words, both are equally attractive investments for a diversified investor. However, since you

are still in school and do not have a lot of money, your investment portfolio is not diversified. You have decided to invest in the stock

that has the highest expected return per unit of total risk.

If the expected return and standard deviation of returns for Stock A are $11$ percent and $25$ percent, respectively, and the expected

return and standard deviation of returns for Stock B are $17$ percent and $40$ percent, respectively, which should you choose? Assume

that the risk$-$free rate is $7$ percent. $($Round answers to $3$ decimal places, e$.$g$.0\mathrm{.}750.)$

Highest expected return per unit of risk