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2. Below are hypothetical returns for the stocks of two companies. a. Calculate the average returns and standard deviations for the two stocks Year Stock
2. Below are hypothetical returns for the stocks of two companies. a. Calculate the average returns and standard deviations for the two stocks Year Stock A's Return Stock B's Return 1 12% 4% 2 25% 10% 3 15% 5% 4 -12% -6% 5 18% 3% 6 55% 25% 7 10% 8% 8 3% 15% 9 -7% -2% 10 16% 10% b. Assume you have a portfolio comprised of 70% Stock A and 30% stock B. Given a correlation of the returns between the two stocks of 0.8267, calculate the variance and the standard deviation of the combined portfolio
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