Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please just do whats shown Using the data in the following table, consider a portfolio that maintains a 65% weight on stock A and a

image text in transcribed

please just do whats shown

Using the data in the following table, consider a portfolio that maintains a 65% weight on stock A and a 35% weight on stock B. a. What is the return each year of this portfolio? b. Based on your results from part (a), compute the average return and volatility of the portfolio. c. Show that (i) the average return of the portfolio is equal to the (weighted) average of the average returns of the two stocks, and (ii) the volatility of the portfolio equals the same result as from the calculation in Eq. 11.9. d. Explain why the portfolio has a lower volatility than the average volatility of the two stocks. 2010 2012 2014 2015 Year Portfolio 2011 % 2013 % % % b. Based on your results from part (a), compute the average return and volatility of the portfolio. The average return of the portfolio is%. (Round to two decimal places.) The volatility of the portfolio is%. (Round to two decimal places.) Data Table c. Show that (i) the average return of the portfolio is equal to the (weig the same result as from the calculation in Eq. 11.9. The average annual return for stock A is %. (Round to two decimal (Click on the following icon in order to copy its contents into a spreadsheet.) The average annual return for stock B is %. (Round to two decima Year Stock A Stock B 2010 -4% 24% 2011 17% 20% 2012 6% 11% 2013 -3% -3% 2014 1% -9% 2015 13% 27% The (weighted average of the average returns of the two stocks is The volatility of the portfolio is%. (Round to two decimal places.) Print d. Explain why the portfolio has a lower volatility than the average vola Done Enter your answer in each of the answer boxes. ? Using the data in the following table, consider a portfolio that maintains a 65% weight on stock A and a 35% weight on stock B. a. What is the return each year of this portfolio? b. Based on your results from part (a), compute the average return and volatility of the portfolio. c. Show that (i) the average return of the portfolio is equal to the (weighted) average of the average returns of the two stocks, and (ii) the volatility of the portfolio equals the same result as from the calculation in Eq. 11.9. d. Explain why the portfolio has a lower volatility than the average volatility of the two stocks. 2010 2012 2014 2015 Year Portfolio 2011 % 2013 % % % b. Based on your results from part (a), compute the average return and volatility of the portfolio. The average return of the portfolio is%. (Round to two decimal places.) The volatility of the portfolio is%. (Round to two decimal places.) Data Table c. Show that (i) the average return of the portfolio is equal to the (weig the same result as from the calculation in Eq. 11.9. The average annual return for stock A is %. (Round to two decimal (Click on the following icon in order to copy its contents into a spreadsheet.) The average annual return for stock B is %. (Round to two decima Year Stock A Stock B 2010 -4% 24% 2011 17% 20% 2012 6% 11% 2013 -3% -3% 2014 1% -9% 2015 13% 27% The (weighted average of the average returns of the two stocks is The volatility of the portfolio is%. (Round to two decimal places.) Print d. Explain why the portfolio has a lower volatility than the average vola Done Enter your answer in each of the answer boxes

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Jack Kapoor

13th Edition

1260799735, 9781260799736

More Books

Students also viewed these Finance questions