Chapter 8, Problem 8.13P

a)

Summary Introduction

To determine: The actual return of the portfolio.

Introduction:

In a financial context; the portfolio return is seen as a percentage that represents the profit on a portfolio of investments.

b)

Summary Introduction

To determine: The average rate of return

Introduction:

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.

c)

Summary Introduction

To determine: The value of the standard deviation.

Introduction:

The standard deviation measures the volatility of the stock. It measures in absolute terms the dispersion of asset risk around its mean.

d)

Summary Introduction

To discuss: The correlation of assets.

e)

Summary Introduction

To discuss: The benefits of diversification by the creation of a portfolio.

Introduction:

Portfolio refers to a set of financial investments such as debentures, stocks, bonds and mutual funds owned by the investor.