Assume you are considering a portfolio containing twoassets, L and M. Asset L will represent 40 %

40% of the dollar value of theportfolio, and asset M will account for the other 60 %

60%. The projected returns over the next 6years, 2018

2018dash

-2023

2023, for each of these assets are summarized in the followingtable: LOADING...

.

a. Calculate the projected portfolioreturn, r overbar Subscript p

rp, for each of the 6 years.

b. Calculate the average expected portfolioreturn, r overbar Subscript p

rp, over the6-year period.

c. Calculate the standard deviation of expected portfolioreturns, s Subscript p

sp, over the6-year period.

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

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