Question
Benefits of
diversification.
 
What is the expected return of investing equally in all three assets​ M, N, and​ O?
 
Find the standard deviations of asset M and of the portfolio equally invested in assets​ M, N, and O.
 
States
Probability
Asset M Return
Asset N Return
Asset O Return
Boom
32%
13%
23%
5%
Normal
50%
11%
15%
11%
Recession
18%
5%
3%
13%
Expand
Transcribed Image Text

States Probability Asset M Return Asset N Return Asset O Return Boom 32% 13% 23% 5% Normal 50% 11% 15% 11% Recession 18% 5% 3% 13%

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