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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 the variance more or less than halfway between the variance of the two individual

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