Refer to Problem 5.3. Assume that asset L represents 60% of the portfolio and asset M is

Question:

Refer to Problem 5.3. Assume that asset L represents 60% of the portfolio and asset M is 40%. Calculate the average return and standard deviation of this portfolio's returns over the six-year period. Compare your answers to the answers from Problem 5.3.

Data from Problem 5.3

Assume you are considering a portfolio containing two 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 projected returns over the next six years, 2018-2023, for each of these assets are summarized in the following table.

Projected Return Asset M Year Asset L 2018 14% 20% 14% 2019 18% 16% 16% 2020 17% 14% 2021 2022 17% 12% 19% 10% 2023

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...