• Make a two-asset portfolio and examine how risk is diversified.

= Stock Spreadsheet Home Insert Page Layout Formulas Data Review View Calibri (Body) 11 A- A Et Wrap Text Percentage Paste B I U . E Merge & Center % Office Update To keep up-to-date with security updates, fixes, and improvements, choose Check for Updates. A27 X V fx =SQRT(B25^2*$C$7^2+C25^2*$C$8^2+2*$F$10*B25*C25*$C$7*$C$8) A B D F G . H J K L M Two Asset Portfolio Return % 3 4 Profile of Individual Assets 5 Expected 6 Asset Return Risk 7 1 15% 10% 35% 8 2 30% 15% 30% 9 25% 10 Correltion coefficient of returns between the assets = 1 20% 11 15% 12 10% 13 Weights Portfolio 5% Standard Expected 0% 14 Portfolio # Asset 1 Asset 2 Deviation Return 0% 15 1 100% 0% 10.00% 15.00% 16 2 90% 10% 10.50% 16.50% 17 3 80% 20% 11.00% 18.00% 18 4 70% 30% 11.50% 19.50% 19 5 60% 40% 12.00% 21.00% 20 6 50% 50% 12.50% 22.50% 21 7 40% 60% 13.00% 24.00% 22 8 30% 70% 13.50% 25.50% 23 9 20% 80% 14.00% 27.00% 24 10 10% 90% 14.50% 28.50% 25 11 0% 100% 15.00% 30.00%