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1. Jane Warren has held a portfolio of two assets, L and M for six years. . Asset L constitutes 40% of portfolio dollar value.
1. Jane Warren has held a portfolio of two assets, L and M for six years. . Asset L constitutes 40% of portfolio dollar value. Asset M constitutes 60% of portfolio dollar value. O Return for Year L-M (a.) Year 2016 2015 2014 2013 2012 2011 Return Asset L 14% 14% 16% 17% 17% 19% Return Asset M 20% 18% 16% LLLLLL 14% 12% 10% (b.) b % a. Calculate the return for each portfolio for each individual year. You will have six expected returns. b. Calculate the average annual return for the portfolio using the individual portfolio return from each year. c. How would you characterize the correlation of returns of individual assets Land M? d. Does your answer in part (d) influence how you look at risk for the portfolio? How does it influence the relationship of the risk and return measures
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