Stock E(R) W Variance (0) Standard Deviation (0) 0.08 A 0.12 0.40 0.0064 0.10 B 0.18 0.60 0.0100 Correlation coefficient between returns of Stocks A and B = 0.8 CHAPTER 8 Pink and Return readsheet Exercise Jane is considering investing in three different stocks or creating three distina stock portfolios. Jame consider herself to be a rather conservative investor. She to obtain forecasted return for the three securities for the year 2015 theough 2012 The data are given in the following table Stock Sroda A LOK Stock 10% 11 2015 2016 2017 2018 2019 2020 2021 14 10 11 15 14 16 14 12 10 15 10 la any of the possible two-stock portfolios, the weight of cach stock in the portate will be 50%. The three posible portfolio combinations are AB, AC, and BC TO DO Create a spreadsheet similar to Tables 8.6 and 8.7 to answer the following: .. Calculate the expected return for each individual stock. b. Calculate the standard deviation for each individual stock. Calculate the expected returns for portfolios AB, AC, and C. d. Calculate the standard deviations for portfolios AB, AC, and BC. Would you recommend that Jane invest in the single stock A or the portfolio consisting of stocks A and B Explain your answer from a risk-return viewpoint. t. Would you recommend that Jane invest in the single stock B or the portfolio consisting of stocks Band C Explain your answer from a risk-eeturn viewpoint. incelab Visit www.wykonancalab.com for Chapter Case: Analyzing Risk and Return on Chargers Products' Investments, Group Berches, and numerous online resources, Stock E(R) W Variance (0) Standard Deviation (0) 0.08 A 0.12 0.40 0.0064 0.10 B 0.18 0.60 0.0100 Correlation coefficient between returns of Stocks A and B = 0.8 CHAPTER 8 Pink and Return readsheet Exercise Jane is considering investing in three different stocks or creating three distina stock portfolios. Jame consider herself to be a rather conservative investor. She to obtain forecasted return for the three securities for the year 2015 theough 2012 The data are given in the following table Stock Sroda A LOK Stock 10% 11 2015 2016 2017 2018 2019 2020 2021 14 10 11 15 14 16 14 12 10 15 10 la any of the possible two-stock portfolios, the weight of cach stock in the portate will be 50%. The three posible portfolio combinations are AB, AC, and BC TO DO Create a spreadsheet similar to Tables 8.6 and 8.7 to answer the following: .. Calculate the expected return for each individual stock. b. Calculate the standard deviation for each individual stock. Calculate the expected returns for portfolios AB, AC, and C. d. Calculate the standard deviations for portfolios AB, AC, and BC. Would you recommend that Jane invest in the single stock A or the portfolio consisting of stocks A and B Explain your answer from a risk-return viewpoint. t. Would you recommend that Jane invest in the single stock B or the portfolio consisting of stocks Band C Explain your answer from a risk-eeturn viewpoint. incelab Visit www.wykonancalab.com for Chapter Case: Analyzing Risk and Return on Chargers Products' Investments, Group Berches, and numerous online resources
