Calculate the projected portfolio return

Reference no: EM131945449

Question: In 900 to 1,000 words in APA manuscript format please complete the below.

Assume you are considering 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 projected returns over the next six years, 2018-2023, for each of these assets are summarized in the following table.

	Projected Return (%)
Year	Asset L	Asset M
2018	14%	20%
2019	14%	18%
2020	16%	16%
2021	17%	14%
2022	17%	12%
2023	19%	10%

1. Use an Excel spreadsheet to calculate the projected portfolio return, rp, for each of the six years.

2. Use an Excel spreadsheet to calculate the average portfolio return, rp, over the six-year period.

3. Use an Excel spreadsheet to calculate the standard deviation of expected portfolio returns, sp, over the six-year period.

4. How would you characterize the correlation of returns of the assets L and M?

5. Discuss any benefits of diversification achieved through creation of the portfolio.

Reference no: EM131945449

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