Question

5-12 Portfolio return and standard deviation Jamie Wong is considering building a

portfolio containing two assets, L and M. Asset L will represent 40% of the

dollar value of the portfolio, and asset M will account for the other 60%. The

expected returns over the next 6 years, 2004-2009, for each of these assets, are

shown in the following table.

Year Asset L Asset M

2004  14%  20%

2005  14  18

2006  16  16

2007  17  14

2008  17  12

2009  19  10

a. Calculate the expected portfolio return, kp for each of the 6 years.

b. Calculate the expected value of portfolio returns, kp, over the 6-year period.

c. Calculate the standard deviation of expected portfolio returns, over the 6-year period.​

Answer 1

Answer:

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Explanation:

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Answer 2

Answer:

2 Portfolio return and standard deviation Jamie Wong is considering building a

portfolio containing two assets, L and M. Asset L will represent 40% of the

dollar value of the portfolio, and asset M will account for the other 60%. The

expected returns over the next 6 years, 2004-2009, for each of these assets, are

shown in the following table.

Year Asset L Asset M

2004  14%  20%

2005  14  18

2006  16  16

2007  17  14

2008  17  12

2009  19  10

a. Calculate the expected portfolio return, kp for each of the 6 years.

b. Calculate the expected value of portfolio returns, kp, over the 6-year period.

c. Calculate the standard deviation of expected portfolio returns, over the 6-year period.