Homework: Chapter 8 Part 2 Homework Question 2, P8-24 (simila... Part 1 of 12 HW Score: 69.23%, 9 of 13 points Score: 0 of 1 Save Benefits of diversification. Sally Rogers has decided to invest her wealth equally across the following three assets: 5 a. What are her expected returns and the risk from her investment in the three assets? How do they compare with investing in asset M alone? Hint: Find the standard deviations of asset M and of the portfolio equally invested in assets M, N, and O. b. Could Sally reduce her total risk even more by using assets M and N only, assets M and O only, or assets N and O only? Use a 50/50 split between the asset pairs, and find the standard deviation of each asset pair. Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) States Boom Normal Recession Probability 29% 52% 19% Asset M Return 10% 8% 2% Asset N Return 20% 12% 0% Asset O Return 2% 8% 10% Print Done