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Assume you are considering a portfolio containing two assets, L and M. Asset L will represent 58% of the dollar value of the portfolio, and
Assume you are considering a portfolio containing two assets, L and M. Asset L will represent 58% of the dollar value of the portfolio, and asset M will account for the other 42%. Assume that the portfolio is rebalanced at the end of each year. The expected returns over the next 6 years, 2018-2023, for each of these assets are summarized in the following table a. Calculate the expected portfolio return, rp, for each of the 6 years. b. Calculate the average expected portfolio return, ro, over the 6-year period. c. Calculate the standard deviation of expected portfolio returns, sp, over the 6-year period. d. Assume that asset L represents 42% of the portfolio and asset M 58%. Calculate the average expected return and standard deviation of expected portfolio returns over the 6-year period. e. Compare your answers to the answers from parts b and c
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