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J.P. Morgan Asset Management publishes information about financial investments. Over the past 10 years, the expected return for the S&P 500 was 5.04% with a

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J.P. Morgan Asset Management publishes information about financial investments. Over the past 10 years, the expected return for the S&P 500 was 5.04% with a standard deviation of 19.45% and the expected return over that same period for a core bonds fund was 5.78% with a standard deviation of 2.13%. The publication also reported that the correlation between the S&P 500 and core bonds is -0.32. J.P. Morgan Asset Management also reported that the expected return for real estate investment trusts (REITS) was 13.07% with a standard deviation of 23.17%. The correlation between the S&P 500 and REITs is 0.74 and the correlation between core bonds and REITs is -0.04. (Past performance is no guarantee of future results.) You are considering portfolio investments that are composed of an S&P 500 index fund and REITs as well as portfolio investments composed of a core bonds fund and REITS. (a) Using the information provided, determine the covariance between the S&P 500 and REITs and between core bonds and REITs. (Round your answers to three decimal places.) S&P 500 and REITS core bonds and REITS (b) Construct a portfolio that is 50% invested in an S&P 500 fund and 50% invested in REITs. In percentage terms, what are the expected return and standard deviation for such a portfolio? (Round your answer for the standard deviation to two decimal places.) expected return standard deviation % % (c) Construct a portfolio that is 50% invested in a core bonds fund and 50% invested in REITs. In percentage terms, what are the expected return and standard deviation for such a portfolio? (Round your answer for the standard deviation to two decimal places.) expected return % standard deviation (d) Construct a portfolio that is 70% invested in a core bonds fund and 30% investers in REITs. In percentage terms, what are the expected return and standard deviation for such a portfolio? (Round your answer for the standard deviation to two decimal places.) expected return standard deviation % %

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