Assume you are considering a portfolio containing two assets, Land M. Assol L wil represent 41% of the dollar value of the portfolio, and asset M wil account for the other 50%. 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 retum i, for each of the years b. Calculate the average expected portfolio rotum. over the 6-year period. c. Calculate the standard deviation of expected portfolio retums, Sp, over the 6-year period d. How would you characterize the correlation of returns of the two assets and M? e Discuss any benefits of diversification achieved through creation of the portfolio a. The projected portfolio retum, fp, for 2018 is 0% (Round to two decimal places) The projected portfolio retum, i, for 2010 is % (Round to two decimal places.) The projected portfolio retum. , for 2020 is % (Round to two decimal places) The projected portfolio rotum, in, for 2021 is 0% (Round to two decimal places.) The projected portfolio rotum, i, for 2022 1 % (Round to two decimal places.) The projected portfolio retum, i, for 2023 is %. (Round to two decimal places) b. The average expected portfolio retur, ir, over the 6-year period is [I% (Round to two decimal places) c. The standard deviation of expected portfolio retums, S., over the 6-year period is % (Round to three decimal places) d. How wharacter the relation trane of the wall and M? Assume you are considering a portfolio containing two assets, L and M. Asset L will represent 41% of the dollar value of the portfolio, and asset M will account fort over the next 6 years, 2018-2023, for each of these assets are summarized in the following table: a. Calculate the projected portfolio retum, ip, for each of the 6 years, b. Calculate the average expected portfolio retum,ip 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 b. The average expected portfolio return, in over the 6-year period is % (Round to two decimal places.) c. The standard deviation of expected portfolio retums, 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? correlated. (Select from the drop-down menu.) e. Discuss any benefits of diversification achieved through creation of the portfolio. (Select the best choice below.) The assets are OA. By combining these two negatively correlated assets, the overall portfolio risk is reduced. OB. By combining these two negatively correlated assets, the overall portfolio risk is increased. OC. By combining these two negatively correlated assets, the overall portfolio risk is eliminated. OD. By combining these two positively correlated assets, the overall portfolio risk is reduced. Data Table R RI (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) R 0 (R Year 2018 2019 2020 2021 2022 2023 Projected Return Asset L Asset M 15% 20% 13% 17% 16% 16% 17% 13% 17% 11% 20% 9% e ns uri Print Done
