2. Compute the mean return and variance of return for each stock in Problem I using B.
C.
D.
(l) The single-index model.
(2) The historical data.
Compute the covariance between each possible pair of stocks using (l) The single-index model.
(2) The historical data.
Compute the return and standard deviation of a portfolio constructed by placing one-third of your funds in each stock, using (1) The single-index model.
(2) The historical data.
Explain why the answers to parts A. 1 and A.2 were the same, while the answers to parts B. l, B .2 and C.I, C.2 were different.