tr pe Portfolio return and standard deviation Personal Finance Problem Jamie Wong is thinking of building an investment portfolio containing two stocks, Land M. Stock L will represent 60% of the dollar value of the portfolio, and stock Mwill account for the other 40% The historical returns over the next 6 years, 2013 - 2018, for each of these stocks are shown in the following table: a. Calculate the actual portfolio return, p. for each of the 6 years, b. Calculate the expected value of portfolio returns, ip, over the 6-year period. c. Calculate the standard deviation of expected portfolio returns, , over the 6-year period d. 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 a. The actual portfolio return for year 2013 s I]%. (Round to two decimal places.) The actual portfolio return for year 2014 is % (Round to two decimal places.) The actual portfolio return for year 2015 is 0% (Round to two decimal places.) The actual portfolio return for your 2016 is %. (Round to two doormal places.) The actual portfolio return for year 2017 is %. (Round to two decimal places.) The actual portfolio return for year 2018 is % (Round to two decimal places) b. The expected value of portfolio returns. To over the 6-year period is % (Round to two decimal places.) c. The standard deviation of expected portfolio retums,o,, over the 6-year period is % (Round to two decimal places) d. How would you characterize the correlation of returns of the two stocks L and M? (Select the best answer below.) Click to select your answer(s). tual portfolio return for each of the 6 vears. -pected va Data Table andard de characteri nefits of dig (Click on the icon here in order to copy the contents of the data table below tfolio return into a spreadsheet.) lio return for olio return for olio return for Year 2013 2014 2015 2016 2017 2018 Expected return Stock L Stock M 15% 24% 17% 23 18% 22% 19% 21% 21% 20% 21% 19% folio return for tfolio return for eted value of por Print Done Bard deviation of Tom ald you characterize the correlation of returns of the two stocks L and M? (Select the best answer below.) a. Calculate the actual portfolio return, fp, for each of the 6 years. b. Calculate the expected value of portfolio returns, ip, over the 6-year period. c. Calculate the standard deviation of expected portfolio returns, or over the 6-year period. d. How would you characterize the correlation of returns of the two stocks L and M? e. Discuss any benefits of diversification achieved by Jamie through creation of the portfolio b. The expected value of portfolio returns, ip, over the 6-year period is _%. (Round to two decimal places.) C. The standard deviation of expected portfolio returns, or over the 6-year period is % (Round to two decimal places.) d. How would you characterize the correlation of returns of the two stocks L and M? (Select the best answer below.) O A. The assets are positively correlated. OB. The assets are negatively correlated. e. Discuss any benefits of diversification achieved by Jamie through creation of the portfolio. (Select the best answer below.) OOO A. Combining these two negatively correlated assets reduces overall portfolio risk. B. Combining these two negatively correlated assets increases overall portfolio risk. O c. Combining these two positively correlated assets increases overall portfolio risk. D. Combining these two positively correlated assets reduces overall portfolio risk Click to select your answer(s)