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As a new analyst you have calculated the following annual rates of return for the stocks...

As a new analyst you have calculated the following annual rates of return for the stocks of both Lauren Corporation and Raleigh Industries

Year

Lauren rate of return

Kayleigh rate of return

2015

5

5

2016

12

15

2017

-11

5

2018

10

7

2019

12

-10
  1. Compute average return, standard deviations, coefficient of variation co-variances and correlations of the two stocks
  2. Would a combination of Lauren and Kaleigh be good for diversification?
  3. Graph risk return relationship
  4. Identify minimum variance portfolio and optimal tangency portfolio if the risk free rate is 3%
  5. Graph risk return relationship of
    1. Risk free with minimum variance portfolio
    2. Risk free with optimal portfolio
    3. Risk free with Lauren
    4. Risk free with Kayleigh

Solutions

Expert Solution

jeff jeffy answered 3 years ago
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