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Benefits of diversification. Sally Rogers has decided to invest her wealth equally across the following three...

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Finance

Benefits of diversification. Sally Rogers has decided to investher wealth equally across the following three assets. What are herexpected returns and the risk from her investment in the three?assets? How do they compare with investing in asset M? alone?Hint?: Find the standard deviations of asset M and of the portfolioequally invested in assets? M, N, and O.

Also, Please find the expected return of investing equally inall three assets? M, N, and? O.

?States

Probability

Asset M Return

Asset N Return

Asset O Return

??Boom

30?%

13?%

22?%

5?%

??Normal

51?%

11?%

15?%

11?%

??Recession

19?%

5?%

2?%

13?%

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Transcribed Image Text

Benefits of diversification. Sally Rogers has decided to investher wealth equally across the following three assets. What are herexpected returns and the risk from her investment in the three?assets? How do they compare with investing in asset M? alone?Hint?: Find the standard deviations of asset M and of the portfolioequally invested in assets? M, N, and O.Also, Please find the expected return of investing equally inall three assets? M, N, and? O.?StatesProbabilityAsset M ReturnAsset N ReturnAsset O Return??Boom30?%13?%22?%5?%??Normal51?%11?%15?%11?%??Recession19?%5?%2?%13?%

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