a) Discuss the benefit of portfolio diversification. Explain how to achieve diversification benefit. An investor buys 1 share of ABC Ltd at the price of $32 on December 1, 2019. The firm is not expected to pay any dividends. Consider the following three possible scenarios for the share price on December 1, 2020: $50 with a probability of 20% $35 with a probability of 65% $23 with a probability of 15% 

b) Calculate the expected return for holding the share for a year. 

c) Calculate the variance of return and standard deviation of return.  

d) On December 1, 2020, the share is worth $38 and the investor just received a dividend of $3. Calculate the total holding period return and capital gains return over the one-year period. 

e) Explain the difference between expected return and realized return.