Portfolio return and standard deviation Williams is considering building an investment portfolio containing two stocks, x and y. Stock x will represent 30% of the dollar value of the portfolio, and stock y will account for the other 70%. The expected returns over the next 5 years, 20152019, for each of these stocks are shown in the following table.

Expected return

Year	Stock X	Stock Y
2015	12%	22%
2016	13	17
2017	15	19
2018	18	21
2019	19	22

Calculate the expected portfolio return, rp, for each of the 5 years.

Calculate the expected value of portfolio returns, (r ) p, over the 6-year period.

Calculate the standard deviation of expected portfolio returns, (s r ) p, over the 6-year period.

How would you characterize the correlation of returns of the two stocks L and M?

Discuss any benefits of diversification achieved by Jamie through creation of the portfolio.