Benefits of diversification Sally Rogers has decided to invest her wealth equally across the following three assets: 5 What are her expected returns and the risk from her investment in the three assets? How do they compare with investing in asset M alone? Hint Find the standard deviations of asset M and of the portfolio equally invested in assets M, N, and O. What is the expected return of investing equally in all three assets M, N, and O? % (Round to two decimal places.) - X Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) States Boom Normal Recession Probability 34% 49% 17% Asset M Return 10% 7% - 2% Asset N Return 21% 12% 1% Asset O Return - 2% 7% 10% Print Done Beta of a portfolio. The beta of four stocksG, H, I, and are 0.46, 0.83, 1.17, and 1.66, respectively. What is the beta of a portfolio with the following weights in each asset: ?? What is the beta of portfolio 1? (Round to two decimal places.) - X Data Table (Click on the following icon in order to copy its contents into a spreadsheet.) Weight in Stock G Weight in Stock H 25% 25% Portfolio 1 Portfolio 2 Portfolio 3 Weight in Stock 25% 20% 40% Weight in Stock J 25% 10% 30% 30% 10% 40% 20% Print Done Different investor weights. Two risky portfolios exist for investing: one is a bond portfolio with a beta of 0.6 and an expected return of 7.4%, and the other is an equity portfolio with a beta of 1.5 and an expected return of 14.9%. If these portfolios are the only two available assets for investing, what combination of these two assets will give the following investors their desired level of expected return? What is the beta of each investor's combined bond and equity portfolio? a. Bart desired expected return 14% b. Lisa: desired expected return 12% c. Maggie: desired expected return 10% a. The combination of these two assets that will give Bart an expected return of 14% is % in bonds and % in stocks. (Round both answers to two decimal places.)