Question: 2. Portfolio Return and Standard Deviation. You are considering building an investment portfolio with two stocks, ABC and XYZ. ABC will equal 30% of the

 2. Portfolio Return and Standard Deviation. You are considering building an

2. Portfolio Return and Standard Deviation. You are considering building an investment portfolio with two stocks, ABC and XYZ. ABC will equal 30% of the dollar value of the portfolio, and XYZ will equal 70% of the dollar value. The expected returns over the next 5 years are shown below. a) Calculate the expected portfolio return, rp, for each of the five years. b) Calculate the expected value of the portfolio returns over the 5-year period c) Calculate the standard deviation of expected portfolio returns, over the 5-year period d) How would you characterize the correlation of returns of these two stocks? e) Have you achieved any benefits from diversification through this portfolio? Explain

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