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Returns on the stock of First Boston and Midas Metals for the years 2010-2013 are shown below. First Boston Midas Metals Portfolio 2010 -18.00% 26.00%
Returns on the stock of First Boston and Midas Metals for the years 2010-2013 are shown below.
| First Boston | Midas Metals | Portfolio | |
| 2010 | -18.00% | 26.00% | |
| 2011 | 32.00% | -5.00% | |
| 2012 | 18.00% | 3.00% | |
| 2013 | 1.00% | 10.00% |
a. Compute the average annual return for each stock and a portfolio consisting of 50% First Boston and 50% Midas. b. Compute the standard deviation for each stock and the portfolio. c. Are the stocks positively or negatively correlated and what is the effect on risk?
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