P6-24. The table below shows annual returns for Merck and one of its major competitors, Eli Lilly. The final column shows the annual return on a portfolio invested 50% in Lilly and 50% in Merck. The portfolios return is simply a weighted average of the returns of the stocks in the portfolio as shown in the example calculation at the top of the table.

Year	Eli Lilly	Merck	50-50 Portfolio
1994	15.4%	14.9%	15.1% (0.5 x 15.4% + 0.5 x 14.9%)
1995	77.2%	76.4%
1996	32.6%	24%
1997	93.6%	35.5%
1998	29.1%	41.2%
1999	-24.3%	-7.4%
2000	41.9%	41.7%
2001	-14.4%	-35.9%
2002	-17.6%	-1.1%
2003	13.1%	-11.2%
Std. Dev.

a. Fill in the blanks by calculating the 50-50 portfolios return each year from 1995-2003 and then plot this on the graph you created for part (a). How does the portfolio return compare to the returns of the individual stocks in the portfolio?

b. Plot a graph similar to Figure 6.7 showing the returns on Merck, Lilly, and the portfolio, each year.

c. Calculate the standard deviation of Merck, Lilly, and the portfolio and comment on what you find.