Benefits of diversification. Sally Rogers has decided to invest her wealth equally across the following...
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Benefits of diversification. Sally Rogers has decided to invest her wealth equally across the following three assets: LOADING.... What are her expected returns and the risk from her investment in the three assets? How do they compare with investing in asset M alone?Hint: 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 29% 11% 22% -1% Normal 52% 8% 13% 8% Recession 19% -1% 2% 11%
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