1.?(20 points) Assume that the risk-free rate is 1%. Consider thefollowing probability distribution for stocks A and B:?tate Probability Return on Stock A Return on Stock B ????1 0.15 16% -8% 2 0.40 10% 0% 3 0.20 25% 6% 4 0.25 -15% 3% ????(a)??2 points) Calculate the expected rate of return on stock A and B.?(b)??2 points) Calculate the variance of returns on stock A and B, respectively.?(c)??2 points) Calculate the correlation between the returns on stock A and B.?d)??4 points) Calculate the portfolio mean and variance of an equally-weighted portfolio comprising of stock A and B.?e)?(4 points) Calculate the asset allocation and portfolio volatility of a minimum variance portfolio using stock A and B.?f)??6 points) Calculate the asset allocation and the Sharpe ratio of the tangent portfolio using stock A and B.BusinessFinanceFINANCE N1559
