Stock A and Stock B have the following historical returns a Calculate the average rate of return for each stock during the period 20112015 Assume that someone held a portfolio consisting of 50 percent Stock A and 50 percent Stock B What would have been the realized rate of return on the portfolio i...

a b The standard deviation of returns is estimated as follows or Stock A the estim ...

Stock A and Stock B have the following historical returns: a. Calculate the average rate of return

Question:

Stock A and Stock B have the following historical returns:

a. Calculate the average rate of return for each stock during the period 2011â€“2015.
Assume that someone held a portfolio consisting of 50 percent Stock A and 50 percent Stock B. What would have been the realized rate of return on the portfolio in each year from 2011 through 2015? What would have been the average return on the portfolio during this period?
b. Calculate the standard deviation of returns for each stock and for the port- folio. Use Equation 11-4.
c. Looking at the annual returns data on the two stocks, would you guess that the correlation coefficient between returns on the two stocks is closer to 0.9 or to 0.9? Explain youranswer.

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...