Assume you are considering a portfolio containing Asset 1 and Asset 2. Asset 1 will represent 64% of the dollar value of the portfolio, and Asset 2 will account for the other 36%. The projected returns over the next 6 years, 20212026, for each of these assets are summarized in the following table:

Projected Return YearAsset 1Asset 2 2021-8% 33% 202213% 6% 202325% -7% 20243% 19% 2025-11% 34% 202631% -17%

a. Calculate the projected portfolio return, rp, for each of the 6 years.

b. Calculate the average expected portfolio return, rp, over the 6-year period.

c. Calculate the standard deviation of expected portfolio returns, sp, over the 6-year period.

d. How would you characterize the correlation of returns of the assets 1 and 2?

e. Discuss any benefits of diversification achieved through creation of the portfolio.