Question: undefined Suppose that there exist two securities (A and B) with annual expected returns equal to ra = 3% and rs = 5% and standard

undefined Suppose that there exist two securities (A and B) with annual undefined

Suppose that there exist two securities (A and B) with annual expected returns equal to ra = 3% and rs = 5% and standard deviations equal to A = 7% and Op = 10% respectively. The correlation coefficient between the returns of these securities is p= -0.5. 2.1 What is the expected return and the standard deviation of an equally weighted portfolio consisting of the securities A and B? Describe every step of your calculations in detail. (15%) 2.2 What is the expected return and the standard deviation of a portfolio consisting of the securities A and B, if the relevant weights are chosen to minimize the risk of the portfolio? Present the minimisation problem and describe every step of your calculations in detail. (20%) 2.3 How could an investor maximize diversification benefits? Critically discuss and explain in detail. (15%)

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