a. 5.24 p.p. b. 0.72 p.p. c. 2.84 p.p. d. 0.64 p.p. e. 3.18 p.p

Assume that your uncle holds just one stock, East Coast Bank (ECB), which he thinks has very little risk. You agree that the stock is relatively safe, but you want to demonstrate that his risk nould be even if he were more diversified. You obtain the follovv-ing returns data for West Coast Bank (WCB). Both banks have had less variability than most other stocks over the past 5 years. Measured by the standard deviation of returns, by how much your uncle's risk have been reduced if he had held a portfolio consisting of in ECB and the remainder in WCB? (Hint: Use the sample standard deviation formula.) Do not round your intermediate calculations. Year 2 3 5 Average return Standard deviation ECB 40.00% -10.00% 35.00% -5.00% 19.00% 1 s.80% 22.71% wca 40.00% 19.00% -5.00% -10.00% 35.00% 1 s.80% 22.71% C) O C) C) O B. 5.24 p.p. b. 0.72 c. 2.84 p.p. d. 0.64 p.p. e. 3.18 p.p.