P8-13 (similar to) Question Help Portfolio return and standard deviation Personal Finance Problem Jamie Wong is thinking of building an investment portfolio containing two stocks, L and M. Stock Lwill represent 75% of the dollar value of the portfolio, and stock M will account for the other 25%. The historical returns over the next 6 years, 2013 - 2018, for each of these stocks are shown in the following table: a. Calculate the actual portfolio return, fp, for each of the 6 years. b. Calculate the expected value of portfolio returns, in, over the 6-year period. c. Calculate the standard deviation of expected portfolio returns, or over the 6-year period. d. How would you characterize the correlation of returns of the two stocks L. and M? e. Discuss any benefits of diversification achieved by Jamio through creation of the portfolio a. The actual portfolio return for your 2013 is % (Round to two decimal places) Year 2013 2014 2015 2016 2017 2018 Expected return Stock L Stock M 16% 24% 17% 22% 19% 20% 19% 18% 20% 16% 21% 14% International investment returns Personal Finance Problem Joe Martinez, a U.S. citizen living in Brownsville, Texas, invested in the common stock of Telmex, a Mescican corporation. He purchased 2,000 shares at 22.00 pesos per share. Twelve months later, he sold them at 26.25 pesos per share. He received no dividends during that time a. What was Joe's investment return (in percentage torms) for the year, on the basis of the peso value of the shares? b. Tho exchange rate for posos was 12.54 pesos per US$1.00 at the time of the purchase. At the time of the sale, the exchange rate was 13. 11 pesos per US$1.00. Translate the purchase and sale prices into USS c. Calculate Joe's investment return on the basis of the US$ value of the shares d. Explain why the two returns are different. Which one is more important to Joe? Why? a. Joe's investment return (in percentage terms) for the year, on the basis of the peso value of the shares is %. (Round to two decimal places.) Alternative 1 Investment 100% of asset F 50% of asset F and 50% of asset G 50% of asset F and 50% of asset H 2 3