You have been provided by the following information regarding the return of

stock A and the returns of the market index (S&P500)

Month Stock A returns (S&P500) returns

January 0.04 0.03

February 0.08 0.07

March -0.03 -0.02

April 0.02 0.03

May 0.06 0.04

June -0.07 -0.04

Workout the following requirements. Show your detailed work for all requirements

1. Average monthly rate of return for stock A and the index (S&P500)

2. Standard deviation for stock A and the market index (S&P500)

3. The covariance coefficient between stock A and the market index(S&P500)

4. The correlation coefficient between stock A and the market index(S&P500)

5. As a portfolio consists of stock A and the market index, calculate the portfolio expected

return and the portfolio standard deviation. Consider the weights as 60% for stock A and

40% for the market index.