Do Self-Test Problem ST 8-1(c) (d) (e) (f) on textbook P. 380.

Below is a summary of the problem. You are given the following data

Year. HPR of stock A. HPR of stock B. HPR of stock C

2017 12% 16% 12%

2018 14% 14% 14%

2019 16% 12% 16%

How much is correlation coefficient between A and B? between A and C? (Use Excel to find correlation coefficient between two stocks)

(2) Calculate expected rate of return and standard deviation for the portfolio A + B. Assume you invest equal proportion (50%) in each stock

(3) Calculate expected rate of return and standard deviation for the portfolio A +C. Assume you invest equal proportion (50%) in each stock(4) Which portfolio do you recommend? Why?