Stocks A and B have the following returns: (Click on the following icon in order to copy its contents into a spreadsheet.) a. What are the expected returns of the two stocks? b. What are the standard deviations of the returns of the two stocks? c. If their correlation is 0.47, what is the expected return and standard deviation of a portfolio of 59% stock A and 41% stock B ? a. What are the expected returns of the two stocks? The expected return for stock A is (Round to three decimal places.) The expected return for stock B is (Round to three decimal places.) b. What are the standard deviations of the returns of the two stocks? The standard deviation of the return for stock A is . (Round to four decimal places.) The standard deviation of the return for stock B is (Round to four decimal places.) c. If their correlation is 0.47, what is the expected return and standard deviation of a portfolio of 59% stock A and 41% stock B ? The expected return for the portfolio is (Round to four decimal places.) The standard deviation of the return for the portfolio is (Round to four decimal places.) You are examining a portfolio consisting of three stocks. Using the data in the table a. Compute the annual returns for a portfolio with 25% invested in North Air, 30% invested in West Air, and 45% invested in Tex Oil. The annual retum for 2017 will be: (Round to two decimal places.) (Click on the following icon in order to copy its contents into a spreadsheet.) The annual retum for 2018 will be: (Round to two decimal places.) The annual return for 2019 will be: (Round to two decimal places.) b. What is the lowest annual retum for your portfolio in part (a)? How does it compare with the lowest annual A. The portfolio computed in part (a) had its lowest annual return in 2014 (7.30\%). B. The portfolio computed in part (a) had its lowest annual return in 2015(11.40%). C. This is higher than the lowest annual retum of each individual stock and the other portfolios in the table above as well. D. This is lower than each individual stock and the other portfolios in the table above as well. possible, but the standard deviation must be no more than 40%. What do you advise her to do, and what will be the portfolio expected retum and standard deviation? The expected return of the portfolio with stock B is 6. (Round to one decimal place.) The expected return of the portfolio with stock C is W.. (Round to one decimal place.) The standard deviation of the portfolio with stock B is 6. (Round to one decimal place.) The standard deviation of the portfolio with stock C is 6. (Round to one decimal place.) (Select from the drop-down menu.) You would advise your client to choose because it will produce the portfolio with the lower standard deviation. 1.00. In which of the cases is the volatility lower than that of the original stocks? If the correlation is +1.00, the volatility of the portfolio is \%. (Round to one decimal place.) If the correlation is 0.50, the volatlity of the portfolio is 6. (Round to one decimal place.) If the correlation is 0.00, the volatily of the portfolio is %. (Round to one decimal place.) If the correlation is 0.50, the volatility of the portfolio is \%. (Round to one decimal place.) If the correlation is 1.00, the volatility of the portfolio is \%. (Round to one decimal place.) In which of the cases is the volatility lower than that of the original stocks? (Select the best choice below.) A. In cases (b), (c), (d) and (e). B. In all of the cases. C. In none of the cases. D. In cases (d) and (e). The following spreadsheet contains monthly returns for Cola Co. and Gas Co. for 2013. Using these data, estimate the average monthly retum and the volatility for each stock. (Click on the following icon in order to copy its contents into a spreadsheet.) The average monthly return for Cola Co. is 6. (Round to two decimal places.) The average monthly return for Gas Co. is K. (Round to two decimal places.) The volatility for Cola Co. is 6. (Round to two decimal places.) The volatility for Gas Co. is 5 . (Round to two decimal places.)
