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In: Finance

You are to examine the expected return and risk (standard deviation) of a two security portfolio....

You are to examine the expected return and risk (standard deviation) of a two security portfolio. Your portfolio consists of the stock of Wolf Creek Company (WCC) and the stock of RHC Industrial. The two companies’ stocks have the following stock prices over the past 10 years, and they do not pay dividends.

WCC ($) RHC ($)

2006 45 18

2007 49 19

2008 44 21

2009 58 25

2010 55 27

2011 46 25

2012 68 33

2013 75 34

2014 79 39

2015 84 34

2016 98 42

2017 115 43

2018 112 49

2019 135 48

(A – 13 points) calculate the annual holding period returns for each stock.

(B – 10 points ) calculate the average holding period return, the standard deviation of returns for each stock, and the correlation coefficient between the two stocks. You may use the statistical functions in Excel.

Please show all formulas so i can replicate in excel

Expert Solution

jeff jeffy answered 2 years ago

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