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The following table summarizes the annual returns you would have made on two companies – Scientific...

  • The following table summarizes the annual returns you would have made on two companies – Scientific Atlanta, a satellite and date equipment manufacturer and AT&T, the telecom giant from 1988 to 1998.

Year

Scientific Atlanta (%)

AT&T (%)

1989

80.95

58.26

1990

-47.37

-33.79

1991

31

29.88

1992

132.44

30.35

1993

32.02

2.94

1994

25.37

-4.29

1995

-28.57

28.86

1996

0.00

-6.36

1997

11.67

48.64

1998

36.19

23.55
  • A) Estimate the average and standard deviation in annual returns in each company.
  • B) Estimate the covariance and correlation in returns between the two companies
  • C) Estimate the variance of a portfolio composed, in equal parts, of the two investments.

Solutions

Expert Solution

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

I HAVE PROVIDED ANSWERS BY MANUAL CALCULATION AS WELL AS USING EXCEL FUNCTIONS. THANK YOU

ROUNDING IS DONE TILL 4 DECIMALS AS NOTHING IS MENTIONED

jeff jeffy answered 1 year ago
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