7.2 The data below are annual returns for General Foods (GF) and Sigma Technology (ST) for the period 2001-2018, ST is highly regarded by many investors for its innovative products. It had returns more than twice as large as that of GF. Assume an investor placed half her funds in GF and halfin ST during this 15-year period. Her objective was to earn a larger return than that available in GF alone. Assess the performance of the portfolio relative to the performance of each individual security. (a) Calculate the arithmetic mean return for each stock. (b) Calculate the standard deviation for each stock using the STDEV function. (e) Calculate the correlation coefficient using the CORREL function. (d) Calculate the covariance using the COVAR function. (e) Calculate the portfolio return assuming equal weights for each stock. (1) Set up a formula for the portfolio standard deviation that allows you to substitute differ- ent values for the correlation coefficient or the standard deviations of the stocks. Using equal weights for the two stocks, calculate the standard deviation of the portfolio. (g) How does the portfolio return compare to the return on GF alone? How does the risk of the portfolio compare to the risk of having held GF? (h) Assume that the correlation between the two stocks had been 0.10. How much would portfolio risk have changed relative to the result calculated in f? GF ST 2018 -0.141 0.222 2017 0.203 0.079 2016 -0.036 -0.220 2015 -0.204 0.527 2014 0.073 2013 -0.111 0.684 2012 0.023 1.1.16 2011 0.291 0.564 2010 0.448 0.885 2009 0.482 2008 0.196 0.516 -0.628 0.433