In: Finance
Here are the returns on two stocks.
Digital Cheese |
Executive Fruit |
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January |
+17 |
+7 |
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February |
−3 |
+2 |
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March |
+5 |
+4 |
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April |
+7 |
+15 |
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May |
−4 |
+3 |
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June |
+3 |
+5 |
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July |
−2 |
−3 |
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August |
−8 |
−2 |
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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