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What is meant by diversification

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Reference no: EM132600312

The data presented below represents the expected returns on a financial asset in different seasons of the year.

Season of year                Spring              Summer                   Winter

Probability                       40%                  35%                      25%

Returns                              2%                       6%                   10%

Question i) What is the expected return on the asset?

Question ii) What is the standard deviation on the asset?

Question iii) What is the covariance of the asset?

Question iv) What is meant by Diversification and it effect on risk and return on a portfolio?

Reference no: EM132600312

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