Please see the assignment attached below along with instructions.

Excel Project 1 - Portfolio Diversification Calculate: 1. Arithmetic Average Return for each Portfolio. 2. Geometric Average Return for each Portfolio. 3. Standard Deviation of Returns for each Portfolio. 4. Coefficient of Variation=standard deviation/arithmetic average return for each Portfolio. 5. Make comments on effect of portfolio diversification on average returns and riskiness (measured by the standard 6. Make a comment on portfolios Coefficient of Variation. Make comments on effect of portfolio diversification on a (measured by the standard deviation of returns) of the portfolios. Compare all Portfolios on the basis of Coefficient of Variation and make a comment on portfolios Coefficient of Vari 1 Year 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 100% Bonds 10/90 13.7 11.9 6.6 9 3.7 5.2 3.4 1.1 6.5 3.3 6.7 10.2 8.6 9.6 2.1 4.4 1.6 4.2 6 7.1 6.4 8.3 9.7 9.1 22.5 21.5 7.1 9.1 12.9 12.3 15.4 18 11 12.9 3.1 4.5 5.1 6.8 10.9 11.8 9.5 7.2 14.1 15 6.2 5.7 8.6 10.6 -4.2 -3.6 15.4 15.5 2.1 3.2 Portfolos with different weights of Bonds 20/80 30/70 40/60 10.2 8.5 6.8 11.3 13.7 16.1 6.7 8.3 9.8 -1.1 -3.4 -5.6 0.2 -2.9 -5.9 13.8 17.4 21.1 10.6 11.6 12.5 6.7 9 11.4 6.9 9.7 12.5 8.1 9.2 10.2 10.3 12.2 14.2 8.5 7.9 7.2 20.5 19.5 18.5 11.1 13.2 15.3 11.7 11.1 10.5 20.7 23.5 26.3 14.8 16.7 18.6 5.8 7.1 8.4 8.6 10.4 12.3 12.6 13.4 14.3 5 2.8 0.6 15.9 16.8 17.7 5.3 4.8 4.4 12.7 14.7 16.8 -3 -2.4 -1.8 15.5 15.5 15.5 4.3 5.4 6.5 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 5.9 7 -1.5 10.6 7.1 11.3 2.4 3 0.8 2 8.2 7.1 1 4.5 6.9 2.4 -4.5 5.8 7 0.6 9.3 6.2 9.3 6.4 5 2.1 4.1 7.7 1.2 4.6 6.2 5.3 4 -1.9 5.7 6.9 2.8 7.9 5.3 7.3 10.4 7 3.3 6.2 7.2 -4.4 8.2 7.9 3.7 5.6 0.7 5.6 6.8 4.9 6.6 4.4 5.2 14.6 9 4.6 8.4 6.7 -9.8 11.9 9.6 2.1 7.2 3.4 1. Arithmetic Average Return 2. Geometric Average Return 2. Geometric Average Return 3. Standard Deviation of Returns 4. Coefficion of Variation=standard deviation/arithmetic average return Source: 2014 The Merriman Financial Education Foundation 5.5 6.6 7.1 5.3 3.5 3.2 18.9 11.1 5.9 10.6 6.1 -14.9 15.6 11.2 0.4 8.8 6.2 ess (measured by the standard deviation of returns) of the portfolios. of portfolio diversification on average returns and riskiness n portfolios Coefficient of Variation and the most efficient portfolio. th different weights of Bonds and Stocks 50/50 60/40 70/30 80/20 90/10 100% Stock S&P 500 5.1 3.4 1.8 0.1 -1.6 -3.2 18.5 21 23.5 26 28.5 31.1 11.4 12.9 14.5 16.1 17.6 19.2 -7.8 -10 -12.1 -14.2 -16.3 -18.4 -8.8 -11.7 -14.5 -17.3 -19.9 -22.6 24.9 28.7 32.6 36.5 40.5 44.5 13.5 14.4 15.3 16.2 17 17.9 13.9 16.4 18.9 21.5 24.2 26.8 15.4 18.3 21.3 24.3 27.4 30.6 11.2 12.3 13.3 14.3 15.3 16.3 16.1 18.1 20 22 23.9 25.8 6.6 6 5.4 4.7 4.1 3.4 17.5 16.5 15.5 14.5 13.5 12.4 17.4 19.5 21.7 23.9 26.1 28.4 9.8 9.2 8.6 7.9 7.2 6.5 29.2 32.1 35.1 38.1 41.2 44.4 20.6 22.6 24.5 26.5 28.6 30.6 9.7 10.9 12 13.1 14.1 15 14.1 16 17.9 19.8 21.8 23.8 15.1 15.9 16.7 17.5 18.3 19.1 -1.6 -3.8 -5.9 -8 -10.1 -12.2 18.6 19.4 20.2 21 21.9 22.6 3.9 3.5 3 2.5 2 1.6 18.9 21 23.2 25.4 27.6 29.8 -1.3 -0.7 -0.1 0.4 1 1.5 15.5 15.5 15.5 15.5 15.5 15.5 7.6 8.8 9.9 11 12.1 13.3 4 14.3 19 -14.7 -26.5 37.2 23.8 -7.2 6.6 18.4 32.4 -4.9 21.4 22.5 6.3 32.2 18.5 5.2 16.8 31.5 -3.1 30.5 7.6 10.1 1.3 37.6 23 5.4 6.4 9.3 3.9 2.5 1.2 23.3 13.1 7.1 12.9 5.5 -19.9 19.3 12.8 -1.3 10.4 9 5.2 6.1 11.5 2.6 1.5 -0.9 27.8 15.2 8.4 15.1 5 -24.6 23.1 14.4 -3 11.9 11.9 5 5.7 13.8 1.3 0.5 -2.9 32.5 17.4 9.7 17.4 4.4 -29.2 26.8 15.9 -4.7 13.5 14.8 4.9 5.4 16.1 0 -0.6 -5 37.3 19.5 10.9 19.7 3.7 -33.6 30.6 17.4 -6.4 15.1 17.9 4.7 4.9 18.4 -1.3 -1.7 -7 42.3 21.7 12.2 22.1 3.1 -37.7 34.3 18.8 -8.1 16.7 20.9 4.4 4.4 20.8 -2.6 -2.8 -9 47.3 23.9 13.5 24.5 2.5 -41.7 38 20.2 -9.8 18.2 24.1 33.4 28.6 21 -9.1 -11.9 -22.1 28.7 10.9 4.9 15.8 5.5 -37 26.5 15.1 2.1 16 32.4 0.1192272727 0.1040171588 Geomen Function-1 0 Decimal Return Growth Factor 0.04 0.143 0.19 -0.147 -0.265 0.372 0.238 -0.072 0.066 0.184 0.324 -0.049 0.214 0.225 0.063 0.322 0.185 0.052 0.168 0.315 -0.031 0.305 0.076 0.101 0.013 0.376 0.23 1.04 1.143 1.19 0.853 0.735 1.372 1.238 0.928 1.066 1.184 1.324 0.951 1.214 1.225 1.063 1.322 1.185 1.052 1.168 1.315 0.969 1.305 1.076 1.101 1.013 1.376 1.23 Investment Value 104 118.872 141.45768 120.66340104 88.6875997644 121.679386877 150.639080953 139.793067125 149.019409555 176.438980913 233.605210729 222.158555403 269.70048626 330.383095668 351.197230695 464.282738979 550.17504569 578.784148066 676.019884941 888.966148697 861.408198088 1124.1376985 1209.57216359 1331.73895211 1349.05155849 1856.29494448 2283.24278171 0.334 0.286 0.21 -0.091 -0.119 -0.221 0.287 0.109 0.049 0.158 0.055 -0.37 0.265 0.151 0.021 0.16 0.324 10.402% "Rate" Function 1.334 1.286 1.21 0.909 0.881 0.779 1.287 1.109 1.049 1.158 1.055 0.63 1.265 1.151 1.021 1.16 1.324 3045.84587081 3916.95778986 4739.51892573 4308.22270349 3795.54420177 2956.72893318 3805.310137 4220.08894194 4426.87330009 5126.31928151 5408.26684199 3407.20811045 4310.11825972 4960.94611694 5065.1259854 5875.54614306 7779.22309341 Excel Project 1 - Portfolio Diversification Calculate: 1. Arithmetic Average Return for each Portfolio. 2. Geometric Average Return for each Portfolio. 3. Standard Deviation of Returns for each Portfolio. 4. Coefficient of Variation=standard deviation/arithmetic average return for each Portfolio. 5. Make comments on effect of portfolio diversification on average returns and riskiness (measured by the standard 6. Make a comment on portfolios Coefficient of Variation. Make comments on effect of portfolio diversification on a (measured by the standard deviation of returns) of the portfolios. Compare all Portfolios on the basis of Coefficient of Variation and make a comment on portfolios Coefficient of Vari 1 Year 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 100% Bonds 13.7 6.6 3.7 3.4 6.5 6.7 8.6 2.1 1.6 6 6.4 9.7 22.5 7.1 12.9 15.4 11 3.1 5.1 10.9 9.5 14.1 6.2 8.6 -4.2 15.4 2.1 Portfolos with different weights of Bonds growth fact 10/90 growth fact20/80 1.137 11.9 1.119 10.2 1.066 9 1.09 11.3 1.037 5.2 1.052 6.7 1.034 1.1 1.011 -1.1 1.065 3.3 1.033 0.2 1.067 10.2 1.102 13.8 1.086 9.6 1.096 10.6 1.021 4.4 1.044 6.7 1.016 4.2 1.042 6.9 1.06 7.1 1.071 8.1 1.064 8.3 1.083 10.3 1.097 9.1 1.091 8.5 1.225 21.5 1.215 20.5 1.071 9.1 1.091 11.1 1.129 12.3 1.123 11.7 1.154 18 1.18 20.7 1.11 12.9 1.129 14.8 1.031 4.5 1.045 5.8 1.051 6.8 1.068 8.6 1.109 11.8 1.118 12.6 1.095 7.2 1.072 5 1.141 15 1.15 15.9 1.062 5.7 1.057 5.3 1.086 10.6 1.106 12.7 0.958 -3.6 0.964 -3 1.154 15.5 1.155 15.5 1.021 3.2 1.032 4.3 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 5.9 7 -1.5 10.6 7.1 11.3 2.4 3 0.8 2 8.2 7.1 1 4.5 6.9 2.4 -4.5 1. Arithmetic Average Return 2. Geometric Average Return 2. Geometric Average Return 3. Standard Deviation of Returns 4. Coefficion of Variation=standa 0.0656590909 0.0643889553 0.0643889553 0.0529040128 0.8057378199 Source: 1.059 1.07 0.985 1.106 1.071 1.113 1.024 1.03 1.008 1.02 1.082 1.071 1.01 1.045 1.069 1.024 0.955 5.8 7 0.6 9.3 6.2 9.3 6.4 5 2.1 4.1 7.7 1.2 4.6 6.2 5.3 4 -1.9 1.058 1.07 1.006 1.093 1.062 1.093 1.064 1.05 1.021 1.041 1.077 1.012 1.046 1.062 1.053 1.04 0.981 0.072 0.070908 0.070908 0.049259 0.684148 5.7 6.9 2.8 7.9 5.3 7.3 10.4 7 3.3 6.2 7.2 -4.4 8.2 7.9 3.7 5.6 0.7 0.0785 0.077217 0.077217 0.053255 0.678405 2014 The Merriman Financial Education Foundation 5. Make comments on effect of portfolio diversification on average returns and riskiness (measured by the standard 6. Make adiversification comment on portfolios of Variation. Make comments on effect portfolio on a portfolio increased Coefficient average returns while reducing the riskiness of theof portfolio todiversification some extent depe (measured by the standard deviation of returns) of the portfolios. Compare all Portfolios on the basis of Coefficient of Variation and make a comment on portfolios Coefficient of Vari portfolios coefficient of variation measures the risk per average return and diversification seems to reduce the risk the most efficient portfolio is the one with lowest coefficient of variation in our case the one with 0.678 with 20/80 ess (measured by the standard deviation of returns) of the portfolios. of portfolio diversification on average returns and riskiness n portfolios Coefficient of Variation and the most efficient portfolio. th different weights of Bonds and Stocks growth fact30/70 growth fact40/60 growth fact50/50 1.102 8.5 1.085 6.8 1.068 1.113 13.7 1.137 16.1 1.161 1.067 8.3 1.083 9.8 1.098 0.989 -3.4 0.966 -5.6 0.944 1.002 -2.9 0.971 -5.9 0.941 1.138 17.4 1.174 21.1 1.211 1.106 11.6 1.116 12.5 1.125 1.067 9 1.09 11.4 1.114 1.069 9.7 1.097 12.5 1.125 1.081 9.2 1.092 10.2 1.102 1.103 12.2 1.122 14.2 1.142 1.085 7.9 1.079 7.2 1.072 1.205 19.5 1.195 18.5 1.185 1.111 13.2 1.132 15.3 1.153 1.117 11.1 1.111 10.5 1.105 1.207 23.5 1.235 26.3 1.263 1.148 16.7 1.167 18.6 1.186 1.058 7.1 1.071 8.4 1.084 1.086 10.4 1.104 12.3 1.123 1.126 13.4 1.134 14.3 1.143 1.05 2.8 1.028 0.6 1.006 1.159 16.8 1.168 17.7 1.177 1.053 4.8 1.048 4.4 1.044 1.127 14.7 1.147 16.8 1.168 0.97 -2.4 0.976 -1.8 0.982 1.155 15.5 1.155 15.5 1.155 1.043 5.4 1.054 6.5 1.065 growth factor 5.1 18.5 11.4 -7.8 -8.8 24.9 13.5 13.9 15.4 11.2 16.1 6.6 17.5 17.4 9.8 29.2 20.6 9.7 14.1 15.1 -1.6 18.6 3.9 18.9 -1.3 15.5 7.6 1.051 1.185 1.114 0.922 0.912 1.249 1.135 1.139 1.154 1.112 1.161 1.066 1.175 1.174 1.098 1.292 1.206 1.097 1.141 1.151 0.984 1.186 1.039 1.189 0.987 1.155 1.076 1.057 1.069 1.028 1.079 1.053 1.073 1.104 1.07 1.033 1.062 1.072 0.956 1.082 1.079 1.037 1.056 1.007 5.6 6.8 4.9 6.6 4.4 5.2 14.6 9 4.6 8.4 6.7 -9.8 11.9 9.6 2.1 7.2 3.4 0.085205 0.083354 0.083354 0.063504 0.745314 1.056 1.068 1.049 1.066 1.044 1.052 1.146 1.09 1.046 1.084 1.067 0.902 1.119 1.096 1.021 1.072 1.034 5.5 6.6 7.1 5.3 3.5 3.2 18.9 11.1 5.9 10.6 6.1 -14.9 15.6 11.2 0.4 8.8 6.2 1.055 1.066 1.071 1.053 1.035 1.032 1.189 1.111 1.059 1.106 1.061 0.851 1.156 1.112 1.004 1.088 1.062 0.092114 0.089326 0.089326 0.077422 0.840507 5.4 6.4 9.3 3.9 2.5 1.2 23.3 13.1 7.1 12.9 5.5 -19.9 19.3 12.8 -1.3 10.4 9 1.054 1.064 1.093 1.039 1.025 1.012 1.233 1.131 1.071 1.129 1.055 0.801 1.193 1.128 0.987 1.104 1.09 0.0990682 0.0949511 0.0949511 0.0935952 0.9447556 ess (measured by the standard deviation of returns) of the portfolios. of portfolio on averageon returns and riskiness portfolio todiversification some extent depending the weight of the bonds and stocks. 100% bond portfolio has the least average return wh n portfolios Coefficient of Variation and the most efficient portfolio. ation seems to reduce the risk as measured by standard devition per avarage return. With 100% bond portfolio the coefficient o he one with 0.678 with 20/80 mix. 60/40 growth factor 3.4 21 12.9 -10 -11.7 28.7 14.4 16.4 18.3 12.3 18.1 6 16.5 19.5 9.2 32.1 22.6 10.9 16 15.9 -3.8 19.4 3.5 21 -0.7 15.5 8.8 70/30 1.034 1.21 1.129 0.9 0.883 1.287 1.144 1.164 1.183 1.123 1.181 1.06 1.165 1.195 1.092 1.321 1.226 1.109 1.16 1.159 0.962 1.194 1.035 1.21 0.993 1.155 1.088 1.8 23.5 14.5 -12.1 -14.5 32.6 15.3 18.9 21.3 13.3 20 5.4 15.5 21.7 8.6 35.1 24.5 12 17.9 16.7 -5.9 20.2 3 23.2 -0.1 15.5 9.9 growth factor 80/20 growth factor 1.018 0.1 1.001 1.235 26 1.26 1.145 16.1 1.161 0.879 -14.2 0.858 0.855 -17.3 0.827 1.326 36.5 1.365 1.153 16.2 1.162 1.189 21.5 1.215 1.213 24.3 1.243 1.133 14.3 1.143 1.2 22 1.22 1.054 4.7 1.047 1.155 14.5 1.145 1.217 23.9 1.239 1.086 7.9 1.079 1.351 38.1 1.381 1.245 26.5 1.265 1.12 13.1 1.131 1.179 19.8 1.198 1.167 17.5 1.175 0.941 -8 0.92 1.202 21 1.21 1.03 2.5 1.025 1.232 25.4 1.254 0.999 0.4 1.004 1.155 15.5 1.155 1.099 11 1.11 5.2 6.1 11.5 2.6 1.5 -0.9 27.8 15.2 8.4 15.1 5 -24.6 23.1 14.4 -3 11.9 11.9 0.1062272727 0.1004092642 0.1004092642 0.1108201694 1.0432365109 1.052 1.061 1.115 1.026 1.015 0.991 1.278 1.152 1.084 1.151 1.05 0.754 1.231 1.144 0.97 1.119 1.119 5 5.7 13.8 1.3 0.5 -2.9 32.5 17.4 9.7 17.4 4.4 -29.2 26.8 15.9 -4.7 13.5 14.8 0.1135681818 0.1056620938 0.1056620938 0.1287758821 1.133908107 1.05 1.057 1.138 1.013 1.005 0.971 1.325 1.174 1.097 1.174 1.044 0.708 1.268 1.159 0.953 1.135 1.148 4.9 5.4 16.1 0 -0.6 -5 37.3 19.5 10.9 19.7 3.7 -33.6 30.6 17.4 -6.4 15.1 17.9 1.049 1.054 1.161 1 0.994 0.95 1.373 1.195 1.109 1.197 1.037 0.664 1.306 1.174 0.936 1.151 1.179 0.12095455 0.11055639 0.11055639 0.14729925 1.21780661 rtfolio has the least average return while 100% stock portifolio has the highest standard deviation. so by diversification increase 100% bond portfolio the coefficient of variation is 0.80574 while with 100% stock portfolio it is 1.4 which is highest upon diversi 90/10 -1.6 28.5 17.6 -16.3 -19.9 40.5 17 24.2 27.4 15.3 23.9 4.1 13.5 26.1 7.2 41.2 28.6 14.1 21.8 18.3 -10.1 21.9 2 27.6 1 15.5 12.1 growth factor 100% Stock S&P 500 Decimal Retu Growth Facto Investment Value 0.984 -3.2 4 0.04 1.04 104 1.285 31.1 14.3 0.143 1.143 118.872 1.176 19.2 19 0.19 1.19 141.45768 0.837 -18.4 -14.7 -0.147 0.853 120.663401 0.801 -22.6 -26.5 -0.265 0.735 88.6875998 1.405 44.5 37.2 0.372 1.372 121.679387 1.17 17.9 23.8 0.238 1.238 150.639081 1.242 26.8 -7.2 -0.072 0.928 139.793067 1.274 30.6 6.6 0.066 1.066 149.01941 1.153 16.3 18.4 0.184 1.184 176.438981 1.239 25.8 32.4 0.324 1.324 233.605211 1.041 3.4 -4.9 -0.049 0.951 222.158555 1.135 12.4 21.4 0.214 1.214 269.700486 1.261 28.4 22.5 0.225 1.225 330.383096 1.072 6.5 6.3 0.063 1.063 351.197231 1.412 44.4 32.2 0.322 1.322 464.282739 1.286 30.6 18.5 0.185 1.185 550.175046 1.141 15 5.2 0.052 1.052 578.784148 1.218 23.8 16.8 0.168 1.168 676.019885 1.183 19.1 31.5 0.315 1.315 888.966149 0.899 -12.2 -3.1 -0.031 0.969 861.408198 1.219 22.6 30.5 0.305 1.305 1124.1377 1.02 1.6 7.6 0.076 1.076 1209.57216 1.276 29.8 10.1 0.101 1.101 1331.73895 1.01 1.5 1.3 0.013 1.013 1349.05156 1.155 15.5 37.6 0.376 1.376 1856.29494 1.121 13.3 23 0.23 1.23 2283.24278 4.7 4.9 18.4 -1.3 -1.7 -7 42.3 21.7 12.2 22.1 3.1 -37.7 34.3 18.8 -8.1 16.7 20.9 0.12859091 0.11533728 0.11533728 0.16601237 1.29101173 1.047 1.049 1.184 0.987 0.983 0.93 1.423 1.217 1.122 1.221 1.031 0.623 1.343 1.188 0.919 1.167 1.209 4.4 4.4 20.8 -2.6 -2.8 -9 47.3 23.9 13.5 24.5 2.5 -41.7 38 20.2 -9.8 18.2 24.1 33.4 28.6 21 -9.1 -11.9 -22.1 28.7 10.9 4.9 15.8 5.5 -37 26.5 15.1 2.1 16 32.4 0.334 0.286 0.21 -0.091 -0.119 -0.221 0.287 0.109 0.049 0.158 0.055 -0.37 0.265 0.151 0.021 0.16 0.324 1.334 1.286 1.21 0.909 0.881 0.779 1.287 1.109 1.049 1.158 1.055 0.63 1.265 1.151 1.021 1.16 1.324 3045.84587 3916.95779 4739.51893 4308.2227 3795.5442 2956.72893 3805.31014 4220.08894 4426.8733 5126.31928 5408.26684 3407.20811 4310.11826 4960.94612 5065.12599 5875.54614 7779.22309 0.11922727 0.10401716 10.402% 0.10401716 Geomen Funct"Rate" Function 0.17636483 1.47923224 y diversification increases average returns per risk . h is highest upon diversification it reduces down to .6784 when stock and bonds are comnined in ratio of 20% and 80%. vestment Value ratio of 20% and 80%. Excel Project 1 - Portfolio Diversification Calculate: 1. Arithmetic Average Return for each Portfolio. 2. Geometric Average Return for each Portfolio. 3. Standard Deviation of Returns for each Portfolio. 4. Coefficient of Variation=standard deviation/arithmetic average return for each Portfolio. 5. Make comments on effect of portfolio diversification on average returns and riskiness (measured by the standard 6. Make a comment on portfolios Coefficient of Variation. Make comments on effect of portfolio diversification on a (measured by the standard deviation of returns) of the portfolios. Compare all Portfolios on the basis of Coefficient of Variation and make a comment on portfolios Coefficient of Vari 1 Year 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 100% Bonds 13.7 6.6 3.7 3.4 6.5 6.7 8.6 2.1 1.6 6 6.4 9.7 22.5 7.1 12.9 15.4 11 3.1 5.1 10.9 9.5 14.1 6.2 8.6 -4.2 15.4 2.1 Portfolos with different weights of Bonds growth fact 10/90 growth fact20/80 1.137 11.9 1.119 10.2 1.066 9 1.09 11.3 1.037 5.2 1.052 6.7 1.034 1.1 1.011 -1.1 1.065 3.3 1.033 0.2 1.067 10.2 1.102 13.8 1.086 9.6 1.096 10.6 1.021 4.4 1.044 6.7 1.016 4.2 1.042 6.9 1.06 7.1 1.071 8.1 1.064 8.3 1.083 10.3 1.097 9.1 1.091 8.5 1.225 21.5 1.215 20.5 1.071 9.1 1.091 11.1 1.129 12.3 1.123 11.7 1.154 18 1.18 20.7 1.11 12.9 1.129 14.8 1.031 4.5 1.045 5.8 1.051 6.8 1.068 8.6 1.109 11.8 1.118 12.6 1.095 7.2 1.072 5 1.141 15 1.15 15.9 1.062 5.7 1.057 5.3 1.086 10.6 1.106 12.7 0.958 -3.6 0.964 -3 1.154 15.5 1.155 15.5 1.021 3.2 1.032 4.3 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 5.9 7 -1.5 10.6 7.1 11.3 2.4 3 0.8 2 8.2 7.1 1 4.5 6.9 2.4 -4.5 1. Arithmetic Average Return 2. Geometric Average Return 2. Geometric Average Return 3. Standard Deviation of Returns 4. Coefficion of Variation=standa 0.0656590909 0.0643889553 0.0643889553 0.0529040128 0.8057378199 Source: 1.059 1.07 0.985 1.106 1.071 1.113 1.024 1.03 1.008 1.02 1.082 1.071 1.01 1.045 1.069 1.024 0.955 5.8 7 0.6 9.3 6.2 9.3 6.4 5 2.1 4.1 7.7 1.2 4.6 6.2 5.3 4 -1.9 1.058 1.07 1.006 1.093 1.062 1.093 1.064 1.05 1.021 1.041 1.077 1.012 1.046 1.062 1.053 1.04 0.981 0.072 0.070908 0.070908 0.049259 0.684148 5.7 6.9 2.8 7.9 5.3 7.3 10.4 7 3.3 6.2 7.2 -4.4 8.2 7.9 3.7 5.6 0.7 0.0785 0.077217 0.077217 0.053255 0.678405 2014 The Merriman Financial Education Foundation 5. Make comments on effect of portfolio diversification on average returns and riskiness (measured by the standard 6. Make adiversification comment on portfolios of Variation. Make comments on effect portfolio on a portfolio increased Coefficient average returns while reducing the riskiness of theof portfolio todiversification some extent depe (measured by the standard deviation of returns) of the portfolios. Compare all Portfolios on the basis of Coefficient of Variation and make a comment on portfolios Coefficient of Vari portfolios coefficient of variation measures the risk per average return and diversification seems to reduce the risk the most efficient portfolio is the one with lowest coefficient of variation in our case the one with 0.678 with 20/80 ess (measured by the standard deviation of returns) of the portfolios. of portfolio diversification on average returns and riskiness n portfolios Coefficient of Variation and the most efficient portfolio. th different weights of Bonds and Stocks growth fact30/70 growth fact40/60 growth fact50/50 1.102 8.5 1.085 6.8 1.068 1.113 13.7 1.137 16.1 1.161 1.067 8.3 1.083 9.8 1.098 0.989 -3.4 0.966 -5.6 0.944 1.002 -2.9 0.971 -5.9 0.941 1.138 17.4 1.174 21.1 1.211 1.106 11.6 1.116 12.5 1.125 1.067 9 1.09 11.4 1.114 1.069 9.7 1.097 12.5 1.125 1.081 9.2 1.092 10.2 1.102 1.103 12.2 1.122 14.2 1.142 1.085 7.9 1.079 7.2 1.072 1.205 19.5 1.195 18.5 1.185 1.111 13.2 1.132 15.3 1.153 1.117 11.1 1.111 10.5 1.105 1.207 23.5 1.235 26.3 1.263 1.148 16.7 1.167 18.6 1.186 1.058 7.1 1.071 8.4 1.084 1.086 10.4 1.104 12.3 1.123 1.126 13.4 1.134 14.3 1.143 1.05 2.8 1.028 0.6 1.006 1.159 16.8 1.168 17.7 1.177 1.053 4.8 1.048 4.4 1.044 1.127 14.7 1.147 16.8 1.168 0.97 -2.4 0.976 -1.8 0.982 1.155 15.5 1.155 15.5 1.155 1.043 5.4 1.054 6.5 1.065 growth factor 5.1 18.5 11.4 -7.8 -8.8 24.9 13.5 13.9 15.4 11.2 16.1 6.6 17.5 17.4 9.8 29.2 20.6 9.7 14.1 15.1 -1.6 18.6 3.9 18.9 -1.3 15.5 7.6 1.051 1.185 1.114 0.922 0.912 1.249 1.135 1.139 1.154 1.112 1.161 1.066 1.175 1.174 1.098 1.292 1.206 1.097 1.141 1.151 0.984 1.186 1.039 1.189 0.987 1.155 1.076 1.057 1.069 1.028 1.079 1.053 1.073 1.104 1.07 1.033 1.062 1.072 0.956 1.082 1.079 1.037 1.056 1.007 5.6 6.8 4.9 6.6 4.4 5.2 14.6 9 4.6 8.4 6.7 -9.8 11.9 9.6 2.1 7.2 3.4 0.085205 0.083354 0.083354 0.063504 0.745314 1.056 1.068 1.049 1.066 1.044 1.052 1.146 1.09 1.046 1.084 1.067 0.902 1.119 1.096 1.021 1.072 1.034 5.5 6.6 7.1 5.3 3.5 3.2 18.9 11.1 5.9 10.6 6.1 -14.9 15.6 11.2 0.4 8.8 6.2 1.055 1.066 1.071 1.053 1.035 1.032 1.189 1.111 1.059 1.106 1.061 0.851 1.156 1.112 1.004 1.088 1.062 0.092114 0.089326 0.089326 0.077422 0.840507 5.4 6.4 9.3 3.9 2.5 1.2 23.3 13.1 7.1 12.9 5.5 -19.9 19.3 12.8 -1.3 10.4 9 1.054 1.064 1.093 1.039 1.025 1.012 1.233 1.131 1.071 1.129 1.055 0.801 1.193 1.128 0.987 1.104 1.09 0.0990682 0.0949511 0.0949511 0.0935952 0.9447556 ess (measured by the standard deviation of returns) of the portfolios. of portfolio on averageon returns and riskiness portfolio todiversification some extent depending the weight of the bonds and stocks. 100% bond portfolio has the least average return wh n portfolios Coefficient of Variation and the most efficient portfolio. ation seems to reduce the risk as measured by standard devition per avarage return. With 100% bond portfolio the coefficient o he one with 0.678 with 20/80 mix. 60/40 growth factor 3.4 21 12.9 -10 -11.7 28.7 14.4 16.4 18.3 12.3 18.1 6 16.5 19.5 9.2 32.1 22.6 10.9 16 15.9 -3.8 19.4 3.5 21 -0.7 15.5 8.8 70/30 1.034 1.21 1.129 0.9 0.883 1.287 1.144 1.164 1.183 1.123 1.181 1.06 1.165 1.195 1.092 1.321 1.226 1.109 1.16 1.159 0.962 1.194 1.035 1.21 0.993 1.155 1.088 1.8 23.5 14.5 -12.1 -14.5 32.6 15.3 18.9 21.3 13.3 20 5.4 15.5 21.7 8.6 35.1 24.5 12 17.9 16.7 -5.9 20.2 3 23.2 -0.1 15.5 9.9 growth factor 80/20 growth factor 1.018 0.1 1.001 1.235 26 1.26 1.145 16.1 1.161 0.879 -14.2 0.858 0.855 -17.3 0.827 1.326 36.5 1.365 1.153 16.2 1.162 1.189 21.5 1.215 1.213 24.3 1.243 1.133 14.3 1.143 1.2 22 1.22 1.054 4.7 1.047 1.155 14.5 1.145 1.217 23.9 1.239 1.086 7.9 1.079 1.351 38.1 1.381 1.245 26.5 1.265 1.12 13.1 1.131 1.179 19.8 1.198 1.167 17.5 1.175 0.941 -8 0.92 1.202 21 1.21 1.03 2.5 1.025 1.232 25.4 1.254 0.999 0.4 1.004 1.155 15.5 1.155 1.099 11 1.11 5.2 6.1 11.5 2.6 1.5 -0.9 27.8 15.2 8.4 15.1 5 -24.6 23.1 14.4 -3 11.9 11.9 0.1062272727 0.1004092642 0.1004092642 0.1108201694 1.0432365109 1.052 1.061 1.115 1.026 1.015 0.991 1.278 1.152 1.084 1.151 1.05 0.754 1.231 1.144 0.97 1.119 1.119 5 5.7 13.8 1.3 0.5 -2.9 32.5 17.4 9.7 17.4 4.4 -29.2 26.8 15.9 -4.7 13.5 14.8 0.1135681818 0.1056620938 0.1056620938 0.1287758821 1.133908107 1.05 1.057 1.138 1.013 1.005 0.971 1.325 1.174 1.097 1.174 1.044 0.708 1.268 1.159 0.953 1.135 1.148 4.9 5.4 16.1 0 -0.6 -5 37.3 19.5 10.9 19.7 3.7 -33.6 30.6 17.4 -6.4 15.1 17.9 1.049 1.054 1.161 1 0.994 0.95 1.373 1.195 1.109 1.197 1.037 0.664 1.306 1.174 0.936 1.151 1.179 0.12095455 0.11055639 0.11055639 0.14729925 1.21780661 rtfolio has the least average return while 100% stock portifolio has the highest standard deviation. so by diversification increase 100% bond portfolio the coefficient of variation is 0.80574 while with 100% stock portfolio it is 1.4 which is highest upon diversi 90/10 -1.6 28.5 17.6 -16.3 -19.9 40.5 17 24.2 27.4 15.3 23.9 4.1 13.5 26.1 7.2 41.2 28.6 14.1 21.8 18.3 -10.1 21.9 2 27.6 1 15.5 12.1 growth factor 100% Stock S&P 500 Decimal Retu Growth Facto Investment Value 0.984 -3.2 4 0.04 1.04 104 1.285 31.1 14.3 0.143 1.143 118.872 1.176 19.2 19 0.19 1.19 141.45768 0.837 -18.4 -14.7 -0.147 0.853 120.663401 0.801 -22.6 -26.5 -0.265 0.735 88.6875998 1.405 44.5 37.2 0.372 1.372 121.679387 1.17 17.9 23.8 0.238 1.238 150.639081 1.242 26.8 -7.2 -0.072 0.928 139.793067 1.274 30.6 6.6 0.066 1.066 149.01941 1.153 16.3 18.4 0.184 1.184 176.438981 1.239 25.8 32.4 0.324 1.324 233.605211 1.041 3.4 -4.9 -0.049 0.951 222.158555 1.135 12.4 21.4 0.214 1.214 269.700486 1.261 28.4 22.5 0.225 1.225 330.383096 1.072 6.5 6.3 0.063 1.063 351.197231 1.412 44.4 32.2 0.322 1.322 464.282739 1.286 30.6 18.5 0.185 1.185 550.175046 1.141 15 5.2 0.052 1.052 578.784148 1.218 23.8 16.8 0.168 1.168 676.019885 1.183 19.1 31.5 0.315 1.315 888.966149 0.899 -12.2 -3.1 -0.031 0.969 861.408198 1.219 22.6 30.5 0.305 1.305 1124.1377 1.02 1.6 7.6 0.076 1.076 1209.57216 1.276 29.8 10.1 0.101 1.101 1331.73895 1.01 1.5 1.3 0.013 1.013 1349.05156 1.155 15.5 37.6 0.376 1.376 1856.29494 1.121 13.3 23 0.23 1.23 2283.24278 4.7 4.9 18.4 -1.3 -1.7 -7 42.3 21.7 12.2 22.1 3.1 -37.7 34.3 18.8 -8.1 16.7 20.9 0.12859091 0.11533728 0.11533728 0.16601237 1.29101173 1.047 1.049 1.184 0.987 0.983 0.93 1.423 1.217 1.122 1.221 1.031 0.623 1.343 1.188 0.919 1.167 1.209 4.4 4.4 20.8 -2.6 -2.8 -9 47.3 23.9 13.5 24.5 2.5 -41.7 38 20.2 -9.8 18.2 24.1 33.4 28.6 21 -9.1 -11.9 -22.1 28.7 10.9 4.9 15.8 5.5 -37 26.5 15.1 2.1 16 32.4 0.334 0.286 0.21 -0.091 -0.119 -0.221 0.287 0.109 0.049 0.158 0.055 -0.37 0.265 0.151 0.021 0.16 0.324 1.334 1.286 1.21 0.909 0.881 0.779 1.287 1.109 1.049 1.158 1.055 0.63 1.265 1.151 1.021 1.16 1.324 3045.84587 3916.95779 4739.51893 4308.2227 3795.5442 2956.72893 3805.31014 4220.08894 4426.8733 5126.31928 5408.26684 3407.20811 4310.11826 4960.94612 5065.12599 5875.54614 7779.22309 0.11922727 0.10401716 10.402% 0.10401716 Geomen Funct"Rate" Function 0.17636483 1.47923224 y diversification increases average returns per risk . h is highest upon diversification it reduces down to .6784 when stock and bonds are comnined in ratio of 20% and 80%. vestment Value ratio of 20% and 80%