Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Jan Feb Mar Apr May 2% 5% - 6%

image text in transcribedimage text in transcribed

Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Jan Feb Mar Apr May 2% 5% - 6% 3% - 2% 1% - 2% 9% 0% 5% Stock A Stock B Portfolio 1.5% 1.5% 1.5% 1.5% 1.5% Jun 4% - 1% 1.5% I Consider the following 6 months of returns for 2 stocks and a portfolio of those 2 stocks:. Note: The portfolio is composed of 50% of Stock A and 50% of Stock B. a. What is the expected return and standard deviation of returns for each of the two stocks? b. What is the expected return and standard deviation of returns for the portfolio? c. Is the portfolio more or less risky than the two stocks? Why? a. What is the expected return and standard deviation of returns for each of the two stocks? The expected return of Stock A is 1%. (Round to one decimal place.) The expected return of Stock B is 1%. (Round to one decimal place.) (Round to five decimal places.) The standard deviation of Stock B is 1. (Round to five decimal places.) b. What is the expected return and standard deviation of returns for the portfolio? The expected return of a portfolio composed of 50% Stock A and 50% Stock B is 1%. (Round to one decimal place.) The standard deviation of a portfolio composed of 50% Stock A and 50% Stock B is 1. (Round to five decimal places.) c. Is the portfolio more or less risky than the two stocks? Why? (Select the best choice below.) The standard deviation of Stock A is A. The portfolio is more risky than the two stocks. It has the same expected return but a standard deviation of 0, compared to standard deviations of 0.04195 for both stocks. OB. The portfolio is less risky than the two stocks. It has the same expected return but a standard deviation of 0.04195, compared to standard deviations of 0 for both stocks. O C. The portfolio is less risky than the two stocks. It has the same expected return but a standard deviation of 1, compared to standard deviations of 0.04195 for both stocks. O D. The portfolio is less risky than the two stocks. It has the same expected return but a standard deviation of 0, compared to standard deviations of 0.04195 for both stocks

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Handbook Of Recent Advances In Commodity And Financial Modeling

Authors: Giorgio Consigli, Silvana Stefani, Giovanni Zambruno

1st Edition

3319613189, 978-3319613185

More Books

Students also viewed these Finance questions