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1.A portfolio with a 15% standard deviation generated a return of 5% last year when risk free T-bills were paying 1%. You are considering adding
1.A portfolio with a 15% standard deviation generated a return of 5% last year when risk free T-bills were paying 1%. You are considering adding one more stock to your portfolio, the stock will boost the portfolios expected return to 15% while also increases the standard deviation to 30%. If you are interested in the best risk versus return trade-off, should you add the stock? A. Yes because it increases the portfolio's Sharpe ratio to 0.50 B. No because it decreases the portfolio's sharpe ratio to 0.267 C. Yes because it increases portfolio's return to 15%. D. Yes because it increases portfolio's Sharpe ratio to 0.467 E. No because it increases the risk of the portfolio 2. You calculated that the average return of your portfolio is 7% and the standard deviation is 23%, what is the value at risk (VaR) at 5% for your portfolio? 3. You have been following a stock for 4 months and the following is its past return Year 1: 5% Year 2: 14% Year 3: 12% Year 4: -1% What is the expected return based on historical data? (Put answer in decimal points instead of percentage)
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