5. Using your book and class notes, what is the portfolio return and variance for a portfolio consisting of equal shares of A and B? 6. A & C? B & C? 7. What about for a portfolio consisting of equal shares of A, B and C? 8. Even though you found above that one of these farms has a low average return and a high standard deviation, did it help to include this farm in the 3-farm portfolio? Choose the correct response. a. Yes, including Farm B in the portfolio helped reduce the portfolio variance. That is the beauty of the impact of correlation on the portfolio. As long as the asset is not moving in lock step with another asset in the portfolio (perfect positive correlation), including the asset will always bring down the variance of the portfolio. b. No, including Farm B in the portfolio did not help reduce the portfolio variance. That is the beauty of the impact of correlation on the portfolio. As long as the asset is not moving in lock step with another asset in the portfolio (perfect positive correlation), including the asset will not bring down the variance of the portfolio.

HV5-DATA-H Home Insert Draw Page Layout Fomulas Data Review view JMp Tell me what you want to do Normal Bad A A E Wrap Text A Merge & Center R Conditional Farmat as Good at Painter B I U Neutral Formatting Table A1 0.02996 0.08353 0.10986 199 -0.0 7B8 -0.0183 -0.05338 199 0,01846 0,07188 0,11594 0.0305 10 2001 -0.00217 O.00732M 0.009377 2002 0.002236 0.024882 0.00492 0.0300 0.02419 0.085904 0.054 0.0683 0.0886 201 0,09178 0,05772 -0.0276M 0.02192 -0.00526 0.10298 Sheet1 nsert Delete Farmat Nik Margska AutoSum Sort &