Question
The investor is looking at two potential stocks for inclusion in its portfolio. It intends to divide investment equally between both stocks. The historical performance
The investor is looking at two potential stocks for inclusion in its portfolio. It intends to divide investment equally between both stocks. The historical performance of the two stocks is shown below
Stock A
2021 6%
2020 -4%
2019 11%
2018 10%
2017 7%
Stock B
2021 8%
2020 -12%
2019 13%
2018 12%
2017 9%
A) Use Excel to compute the following
- Expected return and standard deviation of returns for Stock A and Stock B
- Portfolio expected return and standard deviation
- Covariance and correlation between Stock A and B using the formula approach. (No marks to be awarded if MS Excel function is used. You may present your workings in an excel table)
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