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Example 5.14 Investment Portfolio Risk (Linear Function Mean and Variance) Henry Chang has asked for your assistance in establishing a portfolio containing two stocks. Henry has $1,000, which can be allocated in any proportion to two al- tornative stocks. The returns per dollar from these investments will be designated 5 random variables X and Y. Both of these random variables are independent and hav the same mean and variance. Henry wishes to know the risk for various al- location options. You point out that risk is directly related to variance and, thus, that his question would be answered if he knew the variance of various allocation options