Portfolio return and standard deviation Personal Finance Problem Jamie Wong is considering building an investment portfolio containing two stocks, Land M. Stock L will represent 75% of the dollar value of the portfolio, and stock M will account for the other 25%. The expected retums over the next 6 years, 2015-2020, for each of these stocks are shown in the following table: a. Calculate the expected portfolio return, fp, for each of the years. b. Calculate the expected value of portfolio returns. Po over the 6-year period. c. Calculate the standard deviation of expected portfolio retums, or over the 5-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 Jamie through creation of the portfolio. a. The expected portfolio returri for year 2015 is %. (Round to two decimal places.) The expected portfolio return for year 2016 is %. (Round to two decimal places.) The expected portfolio return for year 2017 is %. (Round to two decimal places.) The expected portfolio return for year 2018 is X. (Round to two decimal places.) The expected portfolio return for year 2019 is X. (Round to two decimal places.) The expected portfolio return for year 2020 is %. (Round to two decimal places.) b. The expected value of portfolio retums.rp. over the 6-year period is %. (Rounc Question Viewer laces.) c. The standard deviation expected portfolio retums, or over the 6-year period is %. (Round to two decimal places.) d. How would you characterize the correlation of returns of the two stocks Land M? (Select the best answer below.) O A. The assets are negatively correlated Click to select your answer(s). ? Portfolio return and standard deviation Personal Finance Problem Jamie Wong is considering building an investment portfolio containing two stocks, L and M. Stock L will represent 75% of the dollar value of the portfolio, and stock M will account for the other 25%. The expected returns over the next 6 years, 2015-2020, for each of these stocks are shown the following table: B a. Calculate the expected portfolio return, ro, 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 5-year period. d. How would you characterize the correlation of returns of the two stocks Land M? e. Discuss any benefits of diversification achieved by Jamie through creation of the portfolio. The expected portfolio return for year 2020 is_l%. (Round to two decimal places.) b. The expected value of portfolio returns, ip. over the 6-year period is _%. (Round to two decimal places.) c. The standard deviation of expected portfolio retums. over the 6-year period is%. (Round to two decimal places.) d. How would you characterize the correlation of returns of the two stocks Land M? (Select the best answer below.) O A. The assets are negatively correlated. OB. The assets are positively correlated. c. Discuss any benefils of diversification achieved by Jarrie through creation of the portfolio. (Select the best answer below.) O A. Combining these two negatively correlated assets increases overall portfolio risk. OB. Combining these two positively correlated assets reduces overall portfolio risk. OC. Combining these two positively correlated assets increases overall portfolio risk. OD. Combining these two negatively correlated assets reduces overall portfolio risk. Click to select your answer(s). 2 Portfolio return and standard deviation Personal Finance Problem Jamie Wong is considering building an investment portfolio containing two stocks, Land M. Stock L will represent 75% of the dollar value of the portfolio, and stock M will account for the other 25%. The expected retums over the next 6 years, 2015-2020, for each of these stocks are shown in the following table: a. Calculate the expected portfolio return, fp, for each of the years. b. Calculate the expected value of portfolio returns. Po over the 6-year period. c. Calculate the standard deviation of expected portfolio retums, or over the 5-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 Jamie through creation of the portfolio. a. The expected portfolio returri for year 2015 is %. (Round to two decimal places.) The expected portfolio return for year 2016 is %. (Round to two decimal places.) The expected portfolio return for year 2017 is %. (Round to two decimal places.) The expected portfolio return for year 2018 is X. (Round to two decimal places.) The expected portfolio return for year 2019 is X. (Round to two decimal places.) The expected portfolio return for year 2020 is %. (Round to two decimal places.) b. The expected value of portfolio retums.rp. over the 6-year period is %. (Rounc Question Viewer laces.) c. The standard deviation expected portfolio retums, or over the 6-year period is %. (Round to two decimal places.) d. How would you characterize the correlation of returns of the two stocks Land M? (Select the best answer below.) O A. The assets are negatively correlated Click to select your answer(s). ? Portfolio return and standard deviation Personal Finance Problem Jamie Wong is considering building an investment portfolio containing two stocks, L and M. Stock L will represent 75% of the dollar value of the portfolio, and stock M will account for the other 25%. The expected returns over the next 6 years, 2015-2020, for each of these stocks are shown the following table: B a. Calculate the expected portfolio return, ro, 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 5-year period. d. How would you characterize the correlation of returns of the two stocks Land M? e. Discuss any benefits of diversification achieved by Jamie through creation of the portfolio. The expected portfolio return for year 2020 is_l%. (Round to two decimal places.) b. The expected value of portfolio returns, ip. over the 6-year period is _%. (Round to two decimal places.) c. The standard deviation of expected portfolio retums. over the 6-year period is%. (Round to two decimal places.) d. How would you characterize the correlation of returns of the two stocks Land M? (Select the best answer below.) O A. The assets are negatively correlated. OB. The assets are positively correlated. c. Discuss any benefils of diversification achieved by Jarrie through creation of the portfolio. (Select the best answer below.) O A. Combining these two negatively correlated assets increases overall portfolio risk. OB. Combining these two positively correlated assets reduces overall portfolio risk. OC. Combining these two positively correlated assets increases overall portfolio risk. OD. Combining these two negatively correlated assets reduces overall portfolio risk. Click to select your answer(s). 2