Here are the returns on two stocks. Digital Cheese Executive Fruit January +18 +7 February −2...

Here are the returns on two stocks.

	Digital Cheese		Executive Fruit
January		+18		+7
February		−2		+1
March		+4		+3
April		+6		+16
May		−3		+2
June		+2		+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

jeff jeffy answered 1 year ago

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