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Suppose the asset S offers 1 2 % expected return with 1 4 % standard deviation per year, while the asset B offers 6 %
Suppose the asset S offers expected return with standard deviation per year, while the asset B offers expected return with standard deviation per year.
Assume that:
Scenario : the coefficient of correlation between Band Sand S is
Scenario : the coefficient of correlation between Band Sand S is
calculate the expected return and standard deviation of your portfolio under these two scenarios. How does the benefit of diversification differ between the two cases? your portfolio is in S and in B
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