Portfolio return and standard deviationPersonal Finance ProblemJamie Wong is thinking of building an investment portfolio containing two stocks, L and M. Stock L will represent 70% of the dollar value of the portfolio, and stock M will account for the other 30%. The historical returns over the next 6 years, 20132018, for each of these stocks are shown in the following table:

	Expected return
Year	Stock L		Stock M
2013	14%		20%
2014	15%		18%
2015	15%		16%
2016	15%		14%
2017	17%		12%
2018	19%		10%

a.Calculate the actual portfolio return, rp, for each of the 6 years.

b. Calculate the expected value of portfolio returns, rp, over the 6-year period.

c.Calculate the standard deviation of expected portfolio returns, rp, 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 Jamie through creation of the portfolio.