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 amount each month in the two stocks. (Do not round intermediate calculations. Round your answers to 1 decimal places.)

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

Solutions

Expert Solution

ANSWER IN THE IMAGE ((YELLOW HIGHLIGHTED). FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE. THUMBS UP PLEASE.

A. Image

b. Image

c. variance(37.55) is less than half way between the variance of the two individual stocks(51.70+33.55/2)

jeff jeffy answered 1 year ago

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