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PLEASE SHOW WORK IN EXCEL Assume that your uncle holds just one stock, East Coast Bank (ECB), which he thinks has very little risk. You
PLEASE SHOW WORK IN EXCEL
Assume that your uncle holds just one stock, East Coast Bank (ECB), which he thinks has very little risk. You agree that the stock is relatively safe, buy you want to demonstrate that his risk would be even lower if he were more diversified. You obtain the following returns data for West Coast Bank (WCB). Both banks have had less variability than most other stocks over the past 5 years. Measured by the standard deviation of returns, by how much would your uncle's risk have been reduced if he held a portfolio consisting of 60% in ECB and 40% in WCB? a. Calculate the returns for each year of a portfolio that has 60% ECB and 40% WCB. b. Then, Calculate the average return and standard deviation of ECB and of WCB and of the portfolio of 60% ECB & 40% WCB. 3 portfolio 60% ECB, 40% Year ECB WCB WCB 2107 -10.00% 15.00% 2018 35.00% -5.00% 2019 -5.00% -10.00% 2020 15.00% 35.00% Average standard deviation nStep by Step Solution
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