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2. Answer the following questions given the information in the table below. Annual Return on Return on Inflation Rate Stock A Stock B 2% 5%

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2. Answer the following questions given the information in the table below. Annual Return on Return on Inflation Rate Stock A Stock B 2% 5% 2% 1% 10% 4% 15% 17% 3% 20% 12% 13% a. Calculate the inflation adjusted returns for Stock A and Stock B (the real return). b. Calculate the sample standard deviation, the arithmetic average return and the geometric average return for both stocks. c. Compute the weights that will that will result in the minimum variance portfolio from combining Stock A and Stock B, given a correlation of 0.688. d. Calculate the portfolio standard deviation and expected return for a portfolio that invests 40% in A and 60% in B, given a correlation of 0.688

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