Question
Here are the returns on two stocks. Digital Cheese Executive Fruit January 15 7 February -3 1 March 5 4 April 7 13 May -4
Here are the returns on two stocks.
Digital Cheese Executive Fruit
January 15 7
February -3 1
March 5 4
April 7 13
May -4 2
June 3 5
July -2 -3
August -8 -2
a-1. Calculate the variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Digital Cheese Return Executive Fruit Return
Variance ______% ________%
Standard Deviation ______% ________%
a-2. Which stock is the riskier if held on its own?
- Digital Cheese
- Executive Fruit
b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)
Month Portfolio Return
January ______
February _____
March _____
April ______
May _____
June ______
July _____
August ______
c. Is the standard deviation more or less than half way between the variance of the two individual stocks?
- Less
- More
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Practical Financial Management
Authors: William R. Lasher
8th edition
1305637542, 978-1305887237, 1305887239, 978-1305637542
