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Question 7 Peter is considering building a portfolio containing two assets, A and B. Asset A will represent 40 per cent of the dollar value of the portfolio and Asset B will account for the other 60 per cent. The expected returns over the next three years 2014-2016 for each of these assets are summarised in the following table. Expected return year 2014 2015 2016 Asset A 14% 17% 18% Asset B 20% 14% 12% a Calculate the expected return of the portfolio over the three-year period [2 Marks] b Calculate the standard deviation of expected portfolio returns over the three- [2 Marks] c Discuss any benefits of diversification achieved through creation of the [2 Marks] year period portfolio