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Assume you are considering a portfolio containing two assets, L and M. Asset L will represent 44% of the dollar value of the portfolio, and
Assume you are considering a portfolio containing two assets, L and M. Asset L will represent 44% of the dollar value of the portfolio, and asset M will account for the other 56%. The projected returns over the next 6 years, 2018-2023, for each of these assets are summarized in the following table: 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 two assets L and M ? e. Discuss any benefits of diversification achieved through creation of the portfolio. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
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