Sally Rogers has decided to invest her wealth equally across the following three assets:

a. Find the standard deviations of asset M and of the portfolio equally invested in assets M, N, and O.

b. Could Sally reduce her total risk even more by using assets M and N only, assets M and O only, or assets N and O only? Use a 50/50 split between the asset pairs, and find the standard deviation of each asset pair.

\begin{tabular}{|l|c|c|c|c|} \hline States & Probability & Asset M Retum & Asset N Retum & Asset O Retum \\ \hline Boom & 34% & 14% & 25% & 2% \\ \hline Normal & 45% & 11% & 16% & 11% \\ \hline Recession & 21% & 2% & 5% & 14% \\ \hline \end{tabular}