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You have been asked for your advice in selecting a portfolio of assets and have been...

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

10​%

15​%

11​%

2019

12​%

13​%

13​%

2020

14​%

11​%

15​%

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, rp​, 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, sp comma for each​ portfolio?

f. Which portfolio do you​ recommend? Why?

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Answer #1

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

TOO LENGTHY, TOO MANY QUESTIONS. AS PER HOMEWORKLIB POLICY, I SHOULD ANSWER FIRST 4. I HAVE ANSWERED TILL e (FIRST 5). POST THE LAST QUESTION AGAIN. WILL SOLVE DEFINITELY. HOPE YOU UNDERSTAND, THANK YOU

Home nert Page Layout Formulas Data Review View dd-Ins Cut Σ AutoSum ー E ゴWrap Text ta copy ▼ в 1 프· ー· 鱼, Δ. :r-ㄧ 逻锂函Merge & Center. $, % , 弼,8 Conditional Format eCell Insert Delete Formsat Sort &Find & 2 ClearFe Select Edting Format Painter Formatting, as Table w styles. ▼ ㆆ ▼ Clipboard Alignment Number Cells ASSET A 2018 2019 2020 78 79 80 81 82 83 84 85 86 87 10 12 14 15 13 13 15 EXPECTED RETURN FOR EACH ASSET = STANDARD DEVIATION FOR EACH ASSET- 12.00 13.00 13.00 AVERAGE(J79:181) 2.00 2.00 2.00STDEV.S079:J81) EXPECTED RETURN FOR PORTFOLIO 1-50% ASSET A AND 50% B = NOTE ASSET 50%(ASSET A) + 50%(ASSET B) 12.50 2018 2019 2020 12.5 12.5 12.5 89 90 91 92 93 94 95 96 4 EXPECTED RETURN FOR PORTFOLIO 2-50% ASSET BAND 50% C = NOTE ASSET 50%(ASSET B) + 50%(ASSET C) 12.50 2018 2019 2020 10.5 12.5 14.5 SheetiSheet4PV FV DIVIDENDEMV MEAN STDV DEAR Sheet2 TIME SERIEScom REGRESSIONCAMERAEXP RETURN TREND MATRIXIN 14-01-2019Home nert Page Layout Formulas Data Review View dd-Ins Σ AutoSum Cut ー E ゴWrap Text Sort &Find & Conditional Format CeInsert Delete Format Formatting as Table Styles2 Clear ta copy ▼ в 1 프· ー· 鱼, Δ. :r-ㄧ 逻锂函Merge & Center. $, % , 弼,8 C Format Painter Cells Edting Number Alignment Clipboard H114 97 CORRELATION BETWEEN ASSET A&B- CORRELATION BETWEEN ASSET B & C = 1.00 CORREL(H79:H81,179:181) 1.00 CORREL(179:181,J79:J81) 98 100 101 102 103 104 105 106 107 108 109 110 STANDARD DEVIATION OF PORTFOLIO 1 STANDARD DEVIATION OF PORTFOLIO 2 0.00 STDEV.S(E88:E90) 2.00 STDEV.S(E94:E96) 112 113 114 115 MATRIXIN DEAR Sheet2 TIME SERIEScom REGRESSIONCAMERAEXP RETURN TREND 4 SheetiSheet4PV FV DIVIDENDEMV MEAN STDV 14-01-2019

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