You have been asked for your advice in selecting a portfolio of assets and have been supplied with the following data:

Projected Return Year Asset A Asset B Asset C 2021 13% 17% 13% 2022 15% 15% 15% 2023 17% 13% 17%

You have been told that you can create two portfolio------ one consisting of assets A and B and the other consisting of assets A and C ---------- by investing equal proportions

(50 %) in each of the two component assets.

a. What is the average expected return,r overbar, for each asset over the 3-year period?

b. What is the standard deviation,s, for each asset's expected return?

c. What is the average expected return,r overbar Subscript p, for each of the the portfolios?

d. How would you characterize the correlations of returns of the two assets making up each of the portfolios identified in part c?

e. What is the standard deviation of expected returns,s Subscript p comma for each portfolio?

f. Which portfolio do you recommend? Why?