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Question 2 (total of 12 marks): Refer to the below table to answer the questions that follow. Assume that returns are effective annual rates or
Question 2 (total of 12 marks): Refer to the below table to answer the questions that follow. Assume that returns are effective annual rates or net discrete returns. Stock and Market Portfolio Effective Annual Returns Year Return on Stock A Return on Market Portfolio 2017 0.22 10.30 2018 -0.16 -0.07 2019 0.15 0.28 Provide answers as decimals rounded to 6 decimal places. For example, if your answer is 0.23456789, write it as 0.234568. Question 2a (1 marks): What is stock A's past arithmetic average net discrete return? Answers: Question 2b (1 marks): What is the market's past arithmetic average net discrete return? Answers: Question 2c (2 marks): What is the sample arithmetic standard deviation of stock A's net discrete returns? Answers: Question 2d (2 marks): What is the sample arithmetic standard deviation of the market portfolio's returns? Answers: Question 2e (2 marks): What is the covariance of stock A's returns with the market portfolio? Answers: Question 2f (1 marks): What is the correlation of returns between stock A and the market? Answers: Question 2g (1 marks): What is the beta of stock A? Answers: Question 2h (2 marks): What is the diversifiable variance of stock A? Answers
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