Question
Here are the returns on two stocks. Digital Cheese Executive Fruit January +13 +6 February 3 +1 March +5 +4 April +7 +15 May 4
Here are the returns on two stocks.
Digital Cheese Executive Fruit
January +13 +6
February 3 +1
March +5 +4
April +7 +15
May 4 +2
June +3 +6
July 2 3
August 8 2
Required:
a-1. Calculate the variance and standard deviation of each stock.
a-2. Which stock is riskier if held on its own?
b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks.
c. Is the variance more or less than halfway between the variance of the two individual stocks?
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Investments
Authors: Zvi Bodie, Alex Kane, Alan Marcus, Stylianos Perrakis, Peter
8th Canadian Edition
007133887X, 978-0071338875
