The following table contains annual returns for the stocks of M and N. Use Excel to create

Question:

The following table contains annual returns for the stocks of M and N. Use Excel to create a spreadsheet that calculates the average, standard deviation, and correlation coefficient for the two annual return series. Next, use the averages, standard deviations, and correlation coefficient along with the portfolios shown in the lower table to calculate a range of portfolio return and risk combinations. Finally, graph the range of return and risk combinations.

Portfolio Weights
wM _________wN
1.0 ............ 0.0
0.9 ............ 0.1
0.8 ............ 0.2
0.7 ............ 0.3
0.6 ............ 0.4
0.5 ............ 0.5
0.4 ............ 0.6
0.3 ............ 0.7
0.2 ............ 0.8
0.1 ............ 0.9
0.0 ............ 1.0

Stocks
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A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...