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Assume you are considering a portfolio containing two​ assets, L and M. Asset L will represent...

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Finance

Assume you are considering a portfolio containing two​ assets, Land M. Asset L will represent 44 % of the dollar value of the​portfolio, and asset M will account for the other 56 %. Theprojected returns over the next 6​ years, 2018-2023​, for each ofthese assets are summarized in the following​ table: a. Calculatethe projected portfolio​ return, r p​, for each of the 6 years. b.Calculate the average expected portfolio​ return, r overbarSubscript p​, over the​ 6-year period. c. Calculate the standarddeviation of expected portfolio​ returns, s Subscript p​, over the​6-year period. d. How would you characterize the correlation ofreturns of the two assets L and​ M? e. Discuss any benefits ofdiversification achieved through creation of the portfolio.

Projected Return
YearAsset LAsset M
201813%21%
201915%17%
202016%16%
202118%14%
202217%13%
202319%11%

Answer & Explanation Solved by verified expert
4.2 Ratings (1007 Votes)
1 Return for each year weight of asset L return of asset L weight of asset M return of asset M Year Asset L Asset M 2018 13 21 0441305621 1748 2019 15 17 0441505617 1612 2020 16 16 0441605616 16 2021 18 14 0441805614 1576 2022 17 13 0441705613 1476 2023 19 11    See Answer
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