Problem 5 A late penalty of 78% will apply to new answers. 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% 2 -11% -14% 3 -6% -9% 4 5% 28% 5 14% 8% 6 5% 7% Part 1 What is the arithmetic average return for stock B? 5.83% Correct A B Year Stock A Stock B Formula 1 5% 15% 2 -11% -14% 3 -6% -9% 4 5% 28% 5 14% 8% 1 3 4 5 6 199AWN - 3 4 5 6 7 le D Attempt 1/10 for 10 pts. Attempt 6/10 for 2.2 pts. Part 2 What is the variance for stock B? 4+ decimals Submit Part 3 Attempt 5/10 for 2.2 pts. What is the covariance of returns? 4+ decimals Submit Attempt 2/10 for 2.2 pts. Part 4 What is the mean return of a portfolio with 20% invested in stock A and the remainder in stock B (assuming annual rebalancing)? 3+ decimals Submit Part 5 What is the standard deviation of a portfolio with 20% invested in stock A and the remainder in stock B (assuming annual rebalancing)? 3+ decimals Submit Part 6 Attempt 2/10 for 4.4 pts. What is the mean return of a portfolio with 60% invested in stock A and the remainder in stock B (assuming annual rebalancing)? 3.6% Correct A B C D Portfolio Portfolio Portfolio weight on A standard mean return deviation 0.2 0.0507 =SQRT(A13^2*B$9+(1-A13)^2*C$9+2*A13*(1- A13)*B$10) 0.6 0.03533 =A14*B$8+(1-A14)*C$8 12 13 14 Attempt 4/10 for 2.2 pts. 0.1372 Part 7 What is the standard deviation of a portfolio with 60% invested in stock A and the remainder in stock B (assuming annual rebalancing)? 3+ decimals Submit Attempt 2/10 for 2.2 pts