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In: Finance

  States Probability Asset M Return Asset N Return Asset O Return   Boom 32​% 13​% 23​% 5​%   ...

  States

Probability

Asset M Return

Asset N Return

Asset O Return

  Boom

32​%

13​%

23​%

5​%

  Normal

45​%

11​%

15​%

11​%

  Recession

23​%

5​%

3​%

13​%

a. What is the expected return of investing equally in all three assets M, N, and O?

- what is the expected return of investing in asset M alone?

- what is the standard deviation of the portfolio that invests equally in all three assets M, N, and O?

- what is the standard deviation of asset M?

- by investing in the portfolio that invests equally in all three assets M, N, and O rather than asset M alone, Sally can benefit by increasing her return by ___% and decrease her risk by ___%. (Round to 2 decimal places)

b. What is the expected return of a portfolio of 50% asset M and 50% asset N?

- what is the expected return of a portfolio 50% asset M and 50% asset O?

- what is the expected return of a portfolio 50% asset N and 50% asset O?

- what is the standard deviation of a portfolio of 50% asset M and 50% asset N?

- what is the standard deviation of a portfolio of 50% asset M and 50% asset O?

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