Assume you are considering a portfolio containing two assets, L and M. Asset L will represent 39 % of the dollar value of the portfolio, and asset M will account for the other 61 %. The projected returns over the next 6 years, 2018-2023, for each of these assets are summarized in the following table: LOADING....

a. Calculate the projected portfolio return, r over p, for each of the 6 years.

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

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

d. How would you characterize the correlation of returns of the two assets L and M?

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

The projected portfolio return, for 2018 is L%. (Round to two decimal places.) The projected portfolio return. g. for 2019 is D%. (Round to two decimal places ) The projected portfolio return for 2020 is D% (Round to two decimal places ) The projected portfolio return, g for 2021 is D% (Round to two decimal places ) The projected portfolio return, lp , for 2022 is 96 (Round to two decimal places ) The projected portfolio return, for 2023 is% (Round to two decimal places) b. The average expected portfolio return, p, over the 6-year period is Data Table Click on the icon located on the top-right comer of the data table below in order to copy its contents into a spreadsheet.) Projected Return Year 2018 2019 2020 2021 2022 2023 Asset L 14% 15% 16% 18% 16% 18% Asset M 20% 13% 15% 13% 13% 10% Round to two decimal places.) c The standard deviation of expected portfolio returns 8p Over the 6-year period is % Round to three decimal places d. How would you characterize the correlation of returns of the two assets L and M? The assets are correlated (Select from the drop-down menu,) Print Done e. Discuss any benefits of diversification achieved through creation of the portfolio (Select the best choice below) O A. By combining these two negatively correlated assets, the overall portfolio risk is eliminated. O B. By combining these two negatively correlated assets, the overall portfolio risk is reduced O C. By combining these two positively correlated assets, the overall portfolio risk is reduced O D. By combining these two negatively correlated assets, the overall portfolio risk is increased