Part two requires calculations to answer the questions. Furthermore, it requires qualitative explanations that convey your understanding of the concepts of risk and return of a portfolio. You are required to answer the following questions while providing deeper insights about the concepts of risk and return than those that are provided in the article. There is also a risk-free asset F whose expected return is 9.9 percent.

Question (i)

Calculate the expected return and the standard deviation of Portfolio l, which consists of 40 percent of Asset A and 60 percent of Asset B.

Question (ii)

Calculate the expected return and the standard deviation of Portfolio 2, which consists of 60 percent of Asset A, 22.5 percent of Asset B, and 17.5 percent of Asset C.

Question (iii)

Explain the differences in the risks and the returns between Portfolio 1and 2.

Question (iv)

Calculate the expected return and the standard deviation of Portfolio 3, which consists of 4.8 percent of Asset A, 75 percent of Asset B, and 20.2 percent of the Free Asset F.

Question (v)

Calculate the expected return and the standard deviation of Portfolio 4, which is equally weighted of the three risky assets A, B, and C.

Question (vi)

Calculate the expected return and the standard deviation of Portfolio 5, which is equally weighted of the four assets (i.e. A, B, C, and F).

Question (vii)

Explain the differences in the risks and the returns between Portfolio 3, 4 and 5. Include the impact of the risk-free asset in your explanation.

The table below gives information on three risky assets: A, B, and C. Standard Asset Expected Deviation Correlations return of the Return A B C A 11.5 23 0.25 0.4 B 14 43 0.25 0.15 C 18 58 0.4 0.15 There is also a risk-free asset F whose expected return is 9.9 percent