9-15 Risk and diversification Portfolio rate fraction of portfolio rate of return of return n first asset on first asset fraction of portfolio ate of return X n second asset bn second asset Irwin/McGraw-Hill CThe McGraw-Hill Commpanies, Inc, 2001©The McGraw-Hill Companies, Inc.,2001 9- 15 Irwin/McGraw-Hill Risk and Diversification Portfolio rate of return = fraction of portfolio in first asset x rate of return on first asset + fraction of portfolio in second asset x rate of return on second asset ( ( ( ( ) ) ) )