An analysis of the stock market produces the following information about the returns of two stocks: 
Assume that the returns are positively correlated, with 
12 = 0.80.
a. Find the mean and standard deviation of the return on a portfolio consisting of an equal investment in each of the two stocks.
b. Suppose that you wish to invest $1 million. Discuss whether you should invest your money in stock 1, stock 2, or a portfolio composed of an equal amount of investments on both stocks.
Definitions:
Continental Rifting
The process by which the Earth's crust stretches, breaks, and eventually forms a new ocean basin, often associated with divergent plate boundaries.
Transform Faults
A type of fault where two tectonic plates slide past each other horizontally, commonly found at the boundaries of tectonic plates.
Intrusions
Geological features formed when magma cools and solidifies before reaching the surface, creating bodies of igneous rock.
Mid-Ocean Ridges
Underwater mountain ranges formed by plate tectonics, where new oceanic crust is generated from upwelling magma.
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