Question
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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