S-12 Portfolio return and standard deviation Jamie Wong is considering building a portfolio containing two assets, L. and M. Asset L. will represent 40% of the dollar value of the portfolio, and asset M will account for the other 60%. The expected returns over the next 6 years, 2004-2009, for each of these assets, are shown in the following table. Expected return Year Asset I. Asset M 2004 14% 20% 2005 14 18 2006 46 16 2007 17 14 2008 17 12 2009 19 10 a. Calculate the expected portfolio return, kp, for each of the 6 years. b. Calculate the expected value of portfolio returns, kp, over the 6-year period. c. Calculate the standard deviation of expected portfolio returns, op 6-year period. over the d. How would you characterize the correlation of returns of the two assets L and M? e. Discuss any benefits of diversification achieved through creation of the portfolio.