Question
Problem 26 Intro The following table shows realized rates of return for two stocks. A B C 1 Year Stock A Stock B 2 1
Problem 26
Intro
The following table shows realized rates of return for two stocks.
| A | B | C | |
| 1 | Year | Stock A | Stock B |
| 2 | 1 | 5% | 15% |
| 3 | 2 | -26% | -14% |
| 4 | 3 | -6% | -2% |
| 5 | 4 | 5% | 28% |
| 6 | 5 | 14% | 8% |
| 7 | 6 | 6% | 5% |
Attempt 2/10 for 8 pts.
Part 1
What is the arithmetic average return for stock B?
Correct
| A | B | C | D | |
| 1 | Year | Stock A | Stock B | Formula |
| 2 | 1 | 5% | 15% | |
| 3 | 2 | -26% | -14% | |
| 4 | 3 | -6% | -2% | |
| 5 | 4 | 5% | 28% | |
| 6 | 5 | 14% | 8% | |
| 7 | 6 | 6% | 5% | |
| 8 | Average | -0.003333 | 0.0667 | =AVERAGE(C2:C7) |
Attempt 2/10 for 10 pts.
Part 2
What is the variance for stock B?
Correct
| A | B | C | D | |
| ... | ||||
| 9 | Variance | 0.01987 | 0.02063 | =VAR.S(C2:C7) |
Attempt 3/10 for 8 pts.
Part 3
What is the covariance of returns?
Correct
| A | B | C | D | |
| ... | ||||
| 10 | Covariance | 0.01493 | =COVARIANCE.S(B2:B7,C2:C7) |
Attempt 2/10 for 8 pts.
Part 4
What is the mean return of a portfolio with 20% invested in stock A and the remainder in stock B?
Attempt 1/10 for 10 pts.
Part 5
What is the standard deviation of a portfolio with 20% invested in stock A and the remainder in stock B?
Attempt 1/10 for 10 pts.
Part 6
What is the mean return of a portfolio with 60% invested in stock A and the remainder in stock B?
Attempt 1/10 for 10 pts.
Part 7
What is the standard deviation of a portfolio with 60% invested in stock A and the remainder in stock B?
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Financial Modeling Using Excel And VBA
Authors: Chandan Sengupta
1st Edition
0471267686, 978-0471267683
