Question: Portfolio Return and Standard Deviation. You are considering building an investment portfolio with two stocks, ABC and XYZ. ABC will equal 42% of the dollar

Portfolio Return and Standard Deviation. You are
Portfolio Return and Standard Deviation. You are considering building an investment portfolio with two stocks, ABC and XYZ. ABC will equal 42% of the dollar value of the portfolio, and XYZ will equal 58% of the dollar value. The expected returns over the next 5 years are shown below. Year ABC XYZ T . 15%% 22% 2 16%% 20% 17%% 16% 46 18% 14% 5 19%% 13% Calculate the expected portfolio return, Ip 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, Opp 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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