Chapter 8, Problem 8.13P

a)

Summary Introduction

To discuss:

Actual return of portfolio.

Introduction:

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

b)

Summary Introduction

To discuss:

Average returns

Introduction:

Return: In financial context, return is seen as percentage that represents the profit in an investment.

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

c)

Summary Introduction

To discuss:

Standard deviation.

Introduction:

Risk: The risk can be defined as the uncertainty attached to an event such as investment where there is some amount of risk associated to it as there can be either gain or loss.

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:

Correlation of assets.

e)

Summary Introduction

To discuss:

Benefits of diversification by creation of portfolio.

Introduction:

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