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Below is actual price and dividend data for three companies for each of 7 months Month Security A Security A Security B Security B Security

Below is actual price and dividend data for three companies for each of 7 months

Month Security A Security A Security B Security B Security C Security C
Price Dividend Price Dividend Price Dividend
1 27 33 16
2 29 36 18
3 29 0.25 36 0.35 14 0.4
4 25 32 15
5 26 38 16
6 29 0.25 38 0.35 17 0.4
7 30 39 17

(a)Compute the rate of return for each company for each month.

(b)Compute the average rate of return for each company.

(c)Compute the standard deviation of the rate of return for each company

(d)Compute the correlation coefficient between all possible pairs of securities.

(e)Compute the average return and standard deviation for the following portfolio:

1/2 A + 1/2 B

1/2 A + 1/2 C

1/2 B + 1/2 C

1/3 A + 1/3 B + 1/3 C

(f) Plot the risk and return of all portfolios and indicate the efficient frontiers.

(Kindly show all the steps along with relevant formulas and tables)

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