7 Expected return, risk and diversification [LO 5) The loble gives Information on three risky assets: A, B and C. Correlations Expected return Standard deviation of return 206 GUP SEVN RSK AND RETURN There is also a risk free Asset F whose expected return is 9.9 percent al Portfolio I consists of 40 per cent Asset A and 60 per cent Asset Calculate its expected return and stand ard deviation b Portfolio 2 consists of 60 per cent Asset A. 22.5 per cent Asset Bond 17 5 per cent Asset Calculate its. expected return and standard deviation. Compare your answers to fa and comment d Portfolio 3 consists of 4.8 per cent Asset A. 75 per cent Asset Band 20.2 por cont in the risk free asset. Calculate is expected return and standard deviation Compare your answers to la) and (b) and comment d Portfolio 4 is an equally weighted portfolio of the three risky ossets A Bond Calculate its expected CHAPTERS There is also a risk-free Asset F whose expected return is 9.9 per cent. a) Portfolio 1 consists of 40 per cent Asset A and 60 per cent Asset B. Calculate its expected return and stand- ard deviation b) Portfolio 2 consists of 60 per cent Asset A, 22.5 per cent Asset B and 17.5 per cent Asset C. Calculate its expected return and standard deviation. Compare your answers to (a) and comment. c) Portfolio 3 consists of 4.8 per cent Asset A, 75 per cent Asset B and 20.2 per cent in the risk-free asset. Calculate its expected return and standard deviation. Compare your answers to (a) and (b) and comment. d) Portfolio 4 is an equally weighted portfolio of the three risky assets A, B and C. Calculate its expected return and standard deviation and comment on these results. e) Portfolio 5 is an equally weighted portfolio of all four assets. Calculate its expected return and standard deviation and comment on these results