spreads

Can Add New asset to portfolio if:
New Asset Sharpe Ratio > Current Sharpe Ratio x Correlation of New Asset with Existing Portfolio

In this case:

0.1 > 0.12 x 0.3

So you will be able to add this asset to your portfolio.

Sorry, don't know about the second part, am at work and don't have my books with me.

Cheers,

Andrew