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7. Consider the following 2 stocks: Closing Prices Stock A Stock B Year 1 33.75 112.09 Year 2 31.69 115.74 Year 3 29.17 115.89 Year

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7. Consider the following 2 stocks: Closing Prices Stock A Stock B Year 1 33.75 112.09 Year 2 31.69 115.74 Year 3 29.17 115.89 Year 4 25.64 120.75 Year 5 27.97 125.12 Year 6 30.36 127.46 Year 7 32.74 110.49 Year 8 35.09111.26 Year 9 31.89 106.99 Year 10 33.56 105.17 Near 11 30.12 108.25 If you purchased stock A at the end of year 4 and sold it at the end of year 9, what Cumulative return would you generate? (5 points) = 24% Calculate standard deviation of returns for stock B (5 points) 6.97 If correlation between the returns is - 301, calculate the covariance of returns (5 points) D Consider the following portfolio: 60% is invested in stock A and 40% invested in stock (B) Calculate portfolio standard deviation (5 points)

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