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 a portfolio that invests an equal amount each month in the two stocks. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

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

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Expert Solution

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jeff jeffy answered 1 year ago

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