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1.calculate the variances and volatilities of the following portfolios with equal weights : please use excel and show the instructions( the equations you using for
1.calculate the variances and volatilities of the following portfolios with equal weights: please use excel and show the instructions( the equations you using for calculation)
c. 4-stock portfolio consisted of Dell, Delta Air, AA and GM.
d. 5-stock portfolio consisted of Delta Air, AA, GM, Ford and Anheuser.
2. Using this numerical example to briefly explain why diversifying your portfolio helps reducing portfolio risk and improve your risk-return profile.
The following are the estimated volatilities and correlations of seven U.S. publicly traded stocks: Dell 54% Delta Air 50% AA 72% GM 33% Ford 37% Anheuser 18% Std. Dey Microsoft Dell Delta Air GM Ford Anheuser 42% 54% 50% 72% 33% 37% 18% Microsoft 42% Correlations: 1 65% 27% 19% 22% 6% -7% 65% 1 19% 18% 32% 32% 10% 27% 19% 1 69% 31% 38% 19% 19% 18% 69% 1 35% 58% 11% 22% 32% 31% 35% 1 64% 11% 6% 32% 38% 58% 64% 1 10% -7% 10% 19% 11% 11% 10% 1Step by Step Solution
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