A collection of financial assets and securities is referred to as a portfolio Most Individuals and institutions invest in a portfolio, making portfolio risk analysis an integral part of the field of finance. Just like stand-alone assets and securities, portfolios are also exposed to risk, Portfolio risk refers to the possibility that an investment portfolio will not generate the Investor's expected rate of return. Analyzing portfolio risk and return involves the uriderstanding of expected returns from a portfolio Consider the following case: Mia is an amateur Investor who holds a small portfolio consisting of only four stocks. The stock holdings in her portfolio are shown in the following table Stock Artemis Inc Babish & Co Cornell Industries Percentage of Portfolio 20% 30% 35% 15% Expected Return 6.00% 14.00% 12.00% Standard Deviation 33.00% 37.00% 40.00% 42.00% Danforth Motors 5.00% What is the expected return on Mia's stock portfolio? 15.52% 10.35% 13.97% 7.76% Suppose each stock in Mia's portfolio has a correlation coefficient of 0.4 (p = 0.4) with each of the other stocks. If the weighted average of the risk of the individual securities (as measured by their standard deviations) included in the partially diversified four-stock portfolio is 38%, the portfolio's standard deviation (o,) most likely is 38%