1) Explain what is meant by diversification including

a) What purpose it serves {Which specific variable is increased or decreased}, and the difference between arithmetic and geometric averages

b) Historical average asset performance for Stocks (large and small) and government bonds (long term and short term)

c) Current Government Bond Yields

d) Expected return of a portfolio with 100% stocks, 80% stocks/20% bonds, and 60% stocks, 40% bonds given your answer in b {Use large stocks and long term bonds}

e) Expected return of a portfolio with 100% stocks, 80% stocks/20% bonds, and 60% stocks, 40% bonds given your answer in c. {Use large stocks and long term bonds}