Samer plans to invest in Stock A and Stock B. The correlation between A and B is 0.6. The expected returns are 15% and 18% for stocks A and B, respectively. The standard deviation are 0.111 and 0.235 for Stocks A and B. Find the expected return and the standard deviation of a portfolio with 0.4 of Samer's funds in Stock A. 2- A stock has returns of 3%, 18%, -0.24 and 0.16 for the past four years. Based on this information, what is the standard deviation of this stock? 3- The following historical returns data for the last 7 years have been gathered for stock A and the market rate of return:

How would you estimate the risk of this stock? How could you explain this to the investor who has no specialised knowledge on those issues so that he trusts you? What strategic trading investment would you suggest to this investor regarding stock A?

Assignment 3 EMBA Corporate Finance 1 Samer plans to invest in Stock A and Stock B. The correlation between A and B is 0.6. The expected returns are 15% and 18% for stocks A and B, respectively. The standard deviation are 0.111 and 0.235 for Stocks A and B. Find the expected return and the standard deviation of a portfolio with 0.4 of Samer's funds in Stock A. 2- A stock has returns of 3%, 18%, -0.24 and 0.16 for the past four years. Based on this information, what is the standard deviation of this stock? 3- The following historical returns data for the last 7 years have been gathered for stock A and the market rate of return: Year Stock A % Market rate of return % 2008 14 10 2003 12 12 2003 15 14 How would you estimate the risk of this stock? How could you explain this to the investor who has no specialised knowledge on those issues so that he trusts you? What strategic trading investment would you suggest to this investor regarding stock A