Here are the returns on two stocks. Digital Cheese Executive Fruit January +15 +8 February −2...

Here are the returns on two stocks.

	Digital Cheese		Executive Fruit
January		+15		+8
February		−2		+1
March		+4		+6
April		+6		+16
May		−3		+2
June		+2		+6
July		−1		−2
August		−7		−1

Required:

a-1. Calculate the variance and standard deviation of each stock.

a-2. Which stock is riskier if held on its own?

b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks.

c. Is the variance more or less than halfway between the variance of the two individual stocks?

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 3 years ago

Here are the returns on two stocks. Digital Cheese Executive Fruit January +15 +8 February −4...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +15 +8 February −4 +2 March +6 +7 April +8 +15 May −5 +3 June +4 +8 July −3 −4 August −9 −3 Required: a-1. Calculate the variance and standard deviation of each stock. a-2. Which stock is riskier if held on its own? b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. c. Is...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +18 +8 February −4...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +18 +8 February −4 +1 March +6 +5 April +8 +16 May −5 +2 June +4 +6 July −3 −4 August −9 −3 a-1. Calculate the variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.) a-2. Which stock is the riskier if held on its own? Digital Cheese Executive Fruit b. Now calculate the returns in each month...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +19 +8 February −3...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +19 +8 February −3 +1 March +5 +4 April +7 +17 May −4 +2 June +3 +4 July −2 −3 August −8 −2 a-1. Calculate the variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.) a-2. Which stock is the riskier if held on its own? Digital Cheese Executive Fruit b. Now calculate the returns in each month...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +19 +9, February −2...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +19 +9, February −2 +1, March +4 +4, April +6 +13, May −3 +1, June +3 +5, July −1 −2, August −7 −1 a-1. Calculate the variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.) a-2. Which stock is the riskier if held on its own? Digital Cheese Executive Fruit b.Now calculate the returns in each month of...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +18 +7 February −2...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +18 +7 February −2 +1 March +4 +3 April +6 +16 May −3 +2 June +2 +5 July −1 −2 August −7 −1 a-1. Calculate the variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.) a-2. Which stock is the riskier if held on its own? Digital Cheese Executive Fruit b. Now calculate the returns in each month...

Here are the percentage returns on two stocks. Month Digital Cheese Executive Fruit January 15 %...

Here are the percentage returns on two stocks. Month Digital Cheese Executive Fruit January 15 % 9 % February –4 2 March 5 5 April 7 15 May –5 1 June 3 5 July –3 –3 August –5 –1 a-1. Calculate the monthly variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 1 decimal places.) b. Now calculate the variance and standard deviation of the returns on a portfolio that invests an equal...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +18 +6 February −3...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +18 +6 February −3 +2 March +5 +4 April +7 +16 May −4 +3 June +3 +6 July −2 −3 August −8 −2 Required: a-1. Calculate the variance and standard deviation of each stock. a-2. Which stock is riskier if held on its own? b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. c. Is...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +17 +7 February −3...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +17 +7 February −3 +2 March +5 +4 April +7 +15 May −4 +3 June +3 +5 July −2 −3 August −8 −2 Required: a-1. Calculate the variance and standard deviation of each stock. a-2. Which stock is riskier if held on its own? b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. c. Is...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +14 +7 February −3...

Here are the returns on two stocks. Digital Cheese Executive Fruit January +14 +7 February −3 +1 March +5 +4 April +7 +12 May −4 +2 June +3 +7 July −2 −3 August −8 −2 Required: a-1. Calculate the variance and standard deviation of each stock. a-2. Which stock is riskier if held on its own? b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. c. Is...

2. Two stocks A and B have expected returns, and a variance-covariance matrix of returns given...

2. Two stocks A and B have expected returns, and a variance-covariance matrix of returns given in Table 1. Table 1 Stock A Stock B E(R) 0.14 0.08 Variance-covariance matrix: Stock A Stock B Stock A 0.04 0.012 Stock B 0.012 0.0225 a) What is the correlation coefficient between the returns on stock A and stock B? b) What is the expected return and standard deviation of portfolio S which is invested 80% in stock A and 20% in stock...

Question