Question
Sal has decided to invest her money equally across the three following assets.Please think about what are her expected returns and the risk by investing
Sal has decided to invest her money equally across the three following assets.Please think about what are her expected returns and the risk by investing in the three assets?Please think about how does this compare to investing in Asset M alone? Now, please calculate the standard deviation of Asset M and of the portfolio equally invested in Asset M, N, and O?
StatesProbabilityAsset M ReturnAsset NReturnAsset O Return
Boom30%12%19%2%
Normal50%8%11%8%
Recession20%2%- 2%12%
A. Standard Deviation of Asset M is 2.95% while the standard deviation of the portfolio is 2.69%
B. Standard Deviation of Asset M is4.95%while the standard deviation of the portfolio is 3.65%
C. Standard Deviation of Asset M is3.95%while the standard deviation of the portfolio is 3.14%
D. Standard Deviation of Asset M is2.61%while the standard deviation of the portfolio is 1.89%
E. Standard Deviation of Asset M is3.46%while the standard deviation of the portfolio is 2.46%
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