Question
Use the following information: You are trying to form portfolios based on the following information about Stocks A,B,C and D Expected Return of Stock A
Use the following information:
You are trying to form portfolios based on the following information about Stocks A,B,C and D
Expected Return of Stock A = 5%; Stock B = 8%; Stock C = 15%; Stock D = 21%
The Standard Deviation of Stock A = 12%; Stock B = 18%; Stock C = 32%; Stock D = 40%
The Correlation between A,B = - 0.05; A,C = 0.10, A,D = 0.07; B,C = 0.20; B,D = 0.50; C,D = 0.35
The Risk Free Rate is 4.0%
Using Excel, do/answer the following:
Question 1: Construct a correlation matrix of the four stocks
Question 2: Construct a Covariance matrix of the four stocks.
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