As an investment advisor for MREAF (Momentum Real Estate Advisory Fund), you are about to make a presentation to the portfolio manager of the ET&T pension fund. You would like to show what would have happened had ET&T made an investment in MREAF during the past 13 quarters. The ET&T manager has provided you with historical data on the performance of its portfolio, which is made up entirely of common stock. Historical data for the ET&T portfolio and MREAF are as follows:

Period Ending	ET&T Common Stock Fund		MREAF Real Estate Fund
	Unit Value	Quarterly Dividend	Unit Value	Quarterly Dividend
Quarter 1	$ 701.00	$ 8.28	$ 70.00	$ 2.17
Quarter 2	752.50	8.11	80.05	2.14
Quarter 3	850.52	10.30	90.80	2.01
Quarter 4	953.75	9.81	100.50	2.01
Quarter 5	1,047.57	12.05	99.14	1.87
Quarter 6	1,221.70	14.17	95.50	1.81
Quarter 7	1,443.90	17.18	93.77	1.79
Quarter 8	1,263.31	14.91	80.31	1.54
Quarter 9	1,258.56	13.84	77.34	1.49
Quarter 10	1,526.72	18.32	76.53	1.44
Quarter 11	1,616.81	19.73	78.42	1.51
Quarter 12	1,624.08	19.98	79.01	1.53
Quarter 13	1,560.25	18.88	81.75	1.55

Required:

a. Calculate the quarterly HPR for each investment. HINT: The first HPR will be in quarter 2 because 2 quarters are needed to calculate a return. The first quarter dividend wont be included in the calculations. b. Calculate the arithmetic mean HPR, the standard deviation of the HPRs, and the geometric mean for each fund. Which fund contained more risk per unit of return? c. Calculate the covariance and correlation between Stock Fund and Real Estate Fund? d. Would the proposed portfolio provide any investment diversification?