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The following table contains yearly rate of returns on IBM and Target from 2016 to 2019: Year 2016 2017 2018 2019 Rate of return on
The following table contains yearly rate of returns on IBM and Target from 2016 to 2019: Year 2016 2017 2018 2019 Rate of return on IBM (%) 7 11 12 22 Rate of return on Target (%) 20 13 13 10 1. Would you invest in IBM? Why or why not? (Hint: compute RRC for each stock); 2. Compute the covariance between the return on IBM and the return on Target; 3. In order to mitigate risk (given your result in 2), would you consider investing in a portfolio consisting of IBM and Target? Why or why not? The following table contains yearly rate of returns on IBM and Target from 2016 to 2019: Year 2016 2017 2018 2019 Rate of return on IBM (%) 7 11 12 22 Rate of return on Target (%) 20 13 13 10 1. Would you invest in IBM? Why or why not? (Hint: compute RRC for each stock); 2. Compute the covariance between the return on IBM and the return on Target; 3. In order to mitigate risk (given your result in 2), would you consider investing in a portfolio consisting of IBM and Target? Why or why not
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