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If you have 3 stocks (A), (B), & (C). The following are the rates of returns...

If you have 3 stocks (A), (B), & (C). The following are the rates of returns in the last 5 years for the three stocks:

Stock A

Stock B

Stock C

30

60

20

20

35

30

40

20

40

25

25

35

35

20

40

Required

  1. Calculate the expected returns for individual stocks A, B & C.
  2. Calculate the expected risk for individual stocks A, B & C.
  3. Calculate the covariance and correlation between A&B stocks and A&C stocks
  4. If you decide to construct a portfolio that consist of 40 % for stock (A) & 60% for the selected stocks (B or C). Which portfolio would you choose? Why?

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