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 investors expected rate of return. Analyzing portfolio risk and return involves the understanding of expected returns from a portfolio. Consider the following case: Natalie 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 % of Portfolio Expected Return Standard Deviation OakStream Farms 20% 6% 38% James Barber Broadcasting 30% 14% 42% Little Miami Technologies 35% 12% 45% Clifton Restaurant Holdings 15% 3% 47% What is the expected return on Natalies stock portfolio? Question Blank 1 of 2 7.54% Suppose each stock in Natalies portfolio has a correlation coefficient of 0.4 ( = 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 43%, the portfolios standard deviation (p) is most likely Question Blank 2 of 2 less than 43%.