This question relates to modern investment theory:

Consider the following estimated annual return data involving four asset types in Australia: cash deposits (asset type 1), government bonds (asset types 2), corporate bonds (asset type 3), and corporate shares (asset type 4):

Assuming an equally-weighted investment portfolio, calculate the portfolios expected rate of return and standard deviation of returns.

Expected Return: E(R) p.a. Risk (Std Deviation): o Return correlation coefficient p: 1.0 0.6 0.5 0.1 Asset Type 0.6 0.5 1.0 0.9 0.9 1.0 0.0 0.4 11 0.1 0.0 0.4 1.0