Risk and Return Tutorial

RISK & RETURN TUTORIAL 1. Return of Stock A and B P Stock A B 20% 15% 9% 2 15% 10% 14% 30% 15% 21% 4 15% 13% 12% 5 20% 20% 18% a) Calculate the expected return for Stock A and B b) Calculate the variance for Stock A and B c) Calculate the standard deviation for Stock A and B d) Based on your answer in (c), which stock is riskier. 2. Amy is planning to invest in below portfolio option. STOCK INVESTMEN T RETURN BETA - 150,000 10% 1.50 W N 190,000 5% 1.25 99,000 11% 1.00 120,000 10% 0.50 130,000 15% 1.00 Based on the provided information, calculate: a) Portfolio expected return b) Portfolio beta