Consider two different stocks, A and B, with expected returns A = 17.0% and ?B= 14.9% and with standard deviations A = 12.4% and ?B = 10.0% for those returns. The two assets have a correlation, p, of -0.7.  What is the covariance of the returns of stocks A and B? (use the population correlation to compute the covariance) Generally, will constructing a portfolio from these two stocks reduce or increase the risk compared to the individual stocks? What is the expected return and standard deviation of a portfolio made up of stocks A and B which is 20% stock A (the remainder stock B)?  What is the expected return and standard deviation of a portfolio made up of stocks A and B which is 50% stock A? What is the expected return and standard deviation of a portfolio made up of stocks A and B which is 80% stock A? Which of the portfolios above, either 2, 3, 4, offers the best combination of risk and return?