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Problem 7-12 Diversification Here are the percentage returns on two stocks. Digital Cheese 14% -4 6 Month January February March April May June July August
Problem 7-12 Diversification Here are the percentage returns on two stocks. Digital Cheese 14% -4 6 Month January February March April May June July August Executive Fruit 6% 2 4 14 3 4 -5 -3 8 -5 4 -3 a-1. Calculate the monthly variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 1 decimal places.) Digital Cheese Executive Fruit Variance Standard deviation % a-2. Which stock is the riskier if held on its own? Digital Cheese O Executive Fruit b. Now calculate the variance and standard deviation of the returns on a portfolio that invests an equal amount each month in the two stocks. (Do not round intermediate calculations. Round your answers to 1 decimal places.) Variance Standard deviation % c. Is the variance more or less than half way between the variance of the two individual stocks? more than the 50%-50% less than the 50%-50%
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