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The following table shows realized rates of return for two stocks. A B C 1 Year Stock A Stock B 2 1 5% 15% 3

The following table shows realized rates of return for two stocks.

A B C
1 Year Stock A Stock B
2 1 5% 15%
3 2 -19% -14%
4 3 -6% -2%
5 4 5% 28%
6 5 14% 8%
7 6 16% 5%

Part 1 What is the arithmetic average return for stock B?

Part 2 What is the variance for stock B?

Part 3 What is the covariance of returns?

Part 4 What is the mean return of a portfolio with 20% invested in stock A and the remainder in stock B (assuming annual rebalancing)?

Part 5 What is the standard deviation of a portfolio with 20% invested in stock A and the remainder in stock B (assuming annual rebalancing)?

Part 6 What is the mean return of a portfolio with 60% invested in stock A and the remainder in stock B (assuming annual rebalancing)?

Part 7 What is the standard deviation of a portfolio with 60% invested in stock A and the remainder in stock B (assuming annual rebalancing)?

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