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Consider the following annual returns on 2 stocks: (10 pts) Year HCA WLMT 2017 35% 3% 2016 20% 5% 2015 3% 9% 2014 -12% 15%

  1. Consider the following annual returns on 2 stocks: (10 pts)

Year

HCA

WLMT

2017

35%

3%

2016

20%

5%

2015

3%

9%

2014

-12%

15%

  1. Calculate the expected return on each stock. (2 pts)
  2. Calculate the standard deviation on each stock. (3 pts)
  3. Assume you create a portfolio with equal weight in each stock. Calculate the expected return of the portfolio. (2 pts)
  4. Calculate the standard deviation of the equally weighted portfolio. (3 pts)

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