3. [Three-asset portfolio) (15 pts) Use the 3-asset portfolio return/risk formula to calculate the following portfolio's expected return and risk. Asset Class Portfolio weight Expected return Expected risk 60% 12% 20% Stocks (S) Bonds (B) Cash equivalent (C) 30% 8% 10% 10% 4% 3% Correlation table: 1 Asset Class Stocks (S) Bonds (B) Cash equivalent (C) Stocks (S) Bonds (B) 0.25 Cash equivalent (C) 0.02 0.15 1 For example, the correlation between Stocks (S) and Bonds (B) returns is 0.25 = 25%. 1