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Jason is considering investing in three different stocks or creating three distinct two stock portfolios. Jason considers himself to be a rather conservative investor. He
Jason is considering investing in three different stocks or creating three distinct two stock portfolios. Jason considers himself to be a rather conservative investor. He is able to obtain forecasted returns for the three securities for the years 2015 through 2019. The data are given in the following table. Historical Return Year Stock A Stock B Stock C 2015 10% 10% 12% 2016 13% 11% 14% 2017 15% 8% 10% 2018 14% 12% 11% 2019 16% 10% 9% Weight 50% 50% 50% a) Find the expected return for each individual stock. Show all your workings. (10 marks) b) Calculate the standard deviation for each individual stock. Show all your workings. (18 marks) c) Compute the expected returns for portfolios AB, AC, and BC. Show all your workings. (7 marks)
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