Question

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
2018	14​%	14​%		10​%
2019	16​%	12​%		12​%
2020	18​%	10​%		14​%

You have been told that you can create two portfolios-- 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​, 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 p​, for each of 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, sp, for each​ portfolio?

f. What would happen if you constructed a portfolio consisting of assets​ A, B, and​ C, equally​ weighted? Would this reduce risk or enhance​ return?

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

TOO LENGTHY SUM. TOO MANY CALCULATIONS. SO AS PER HOMEWORKLIB POLICY, I SHOULD ANSWER 4 QUESTIONS, I HAVE ANSWERED 5. KINDLY POST REMAINING PART AGAIN, WILL ANSWER SURELY WITHOUT FAIL. THANK YOU