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Problem 1 1 - 1 9 Diversification ( LO 3 ) Here are the returns on two stocks. table [ [ , table
Problem Diversification LO
Here are the returns on two stocks.
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Required:
a Calculate the variance and standard deviation of each stock.
a Which stock is riskier if held on its own?
b Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks.
c Is the variance more or less than halfway between the variance of the two individual stocks?
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