Question
1. You are given the following data Year HPR of Stock A HPR of Stock B 2019 12% 35% 2020 15% 7% 2021 10%
1. You are given the following data Year HPR of Stock A HPR of Stock B 2019 12% 35% 2020 15% 7% 2021 10% 40% 2022 23% 10% (1) Calculate expected rate of return for each stock . (2) Calculate standard deviation for each stock . (3) Calculate coefficient of variation for each stock. If you will choose only one stock for investment, which stock will you choose? Why? (4) How much is correlation coefficient between A and B? (Use Excel to find correlation coefficient between two stocks) (5) Calculate expected rate of return and standard deviation for the portfolio A+B. Assume you invest equal proportion (50%) in each stock (6) Is this portfolio better than individual stock A and B?
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Financial Management Theory and Practice
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
2nd Canadian edition
176517308, 978-0176517304
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