Assume you are considering a portfolio containing 2 assets, L and M Asset L will represent 40 of the dollar value of the portfolio, and asset M will account for the other 60 The expected returns over the next 6 years, 20152020, for each of these assets are summarized in the following table a Calcul...

a Average portfolio return for each year r p w L x r ...

Assume you are considering a portfolio containing 2 assets, L and M. Asset L will represent 40%

Question:

Assume you are considering a containing 2 assets, L and M. Asset L will represent 40% of the dollar value of the and asset M will account for the other 60%. The expected returns over the next 6 years, 2015€“2020, for each of these assets are summarized in the following table.

Assume you are considering a portfolio containing 2 assets, L

a. Calculate the expected portfolio return, rp, for each of the 6 years.
b. Calculate the average expected portfolio return, rp, over the 6-year period.
c. Calculate the standard deviation of expected portfolio returns, sp, over the 6-year period.
d. How would you characterize the correlation of returns of the assets L and M?
e. Discuss any benefits of diversification achieved through creation of the portfolio.

Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...