Intro

The following table shows realized rates of return for two stocks.

	A	B	C
1	Year	Stock A	Stock B
2	1	5%	15%
3	2	-22%	-14%
4	3	-6%	-9%
5	4	5%	28%
6	5	14%	8%
7	6	20%	4%

What is the arithmetic average return for stock B?

Part 2

What is the variance for stock B?

Part 3

What is the covariance of returns?

Part 4

What is the mean return of a portfolio with 20% invested in stock A and the remainder in stock B (assuming annual rebalancing)?

Part 5

What is the standard deviation of a portfolio with 20% invested in stock A and the remainder in stock B (assuming annual rebalancing)?

Part 6

What is the mean return of a portfolio with 60% invested in stock A and the remainder in stock B (assuming annual rebalancing)?

Part 7

What is the standard deviation of a portfolio with 60% invested in stock A and the remainder in stock B (assuming annual rebalancing)?