8. [0.36/1 Points] PREVIOUS ANSWERS ASWSBE14 5.E.030. ASK YOUR TEACH ER J.P. Morgan Asset Management publishes information about nancial investments. Over the past 10 years, the expected return for the S&P 500 was 5.04% with a standard deviation of 19.45% and the expected return over that same period for a core bonds fund was 5.78% with a standard deviation of 2.13%.T The publication also reported that the correlation between the S&P 500 and core bonds is 0.32. J.P. Morgan Asset Management also reported that the expected return for real estate investment trusts (REITs) was 13.07% with a standard deviation of 23.17%. The correlation between the S&P 500 and RElTs is 0.74 and the corre ation between core bonds and RElTs is 0.04. (Past performance is no guarantee of future results.) You are considering portfolio investments that are composed of an S&P 500 index fund and REITs as well as portfolio investments composed of a core bonds fund and RElTs. (a) Using the information provided, determine the covariance between the S&P 500 and RElTs and between core bonds and REITs. (Round your answers to three decimal places.) S&P 500 and REITS 43.26 x core bonds and REITs (b) Construct a portfolio that is 50% invested in an S&P 500 fund and 50% invested in REITs. In percentage terms, what are the expected return and standard deviation for such a portfolio? (Round your answer for the standard deviation to two decimal places.) expected return 5.41 x % standard deviation % (c) Construct a portfolio that is 50% invested in a core bonds fund and 50% invested in REITs. In percentage terms, what are the expected return and standard deviation for such a portfolio? (Round your answer for the standard deviation to two decimal places.) expected return 8908 x % x % standard deviation 9. (d) Construct a portfolio that is 70% invested in a core bonds fund and 30% invested in REITs. In percentage terms, what are the expected return and standard deviation for such a portfolio? (Round your answer for the standard deviation to two decimal places.) expected return % standard deviation % (e) which of the portfolios in parts (b), (c), and (d) would you recommend to an aggressive investor? Why? The portfolio consisting of 50% core bonds and 50% REITs v y is recommended for the aggressive investor because of its higher v y return and moderate amount of risk. Which would you recommend to a conservative investor? Why? The portfolio consisting of 70% core bonds and 30% REITs v 'y is recommended to the conservative investor because of its moderate return and low v risk