Consider the following six months of returns for two stocks and a portfolio of those two stocks: (Click the icon to view the monthly returns.) Note: The portfolio is composed of 50% of Stock A and 50% of Stock B. a. What is the expected return and standard deviation of returns for each of the two stocks? b. What is the expected return and standard deviation of returns for the portfolio? c. Is the portfolio more or less risky than the two stocks? Why? a. What is the expected return and standard deviation of returns for each of the two stocks? The expected return of Stock A is 1.0 %. (Round to one decimal place.) The expected return of Stock B is 1.0 %. (Round to one decimal place.) The standard deviation of Stock A is (Round to five decimal places.) Monthly Returns Jan Feb Mar Apr May Jun Stock A 2% 5% -6% 3% -2% 4% Stock B 0% 3% 8% -1% 4% -2% Portfolio 1% 1% 1% 1% 1% 1% Print Done -X
Consider the following six months of returns for two stocks and a portfolio of those two stocks: (Click the icon to view the monthly returns.) Note: The portfolio is composed of 50% of Stock A and 50% of Stock B. a. What is the expected return and standard deviation of returns for each of the two stocks? b. What is the expected return and standard deviation of returns for the portfolio? c. Is the portfolio more or less risky than the two stocks? Why? a. What is the expected return and standard deviation of returns for each of the two stocks? The expected return of Stock A is 1.0 %. (Round to one decimal place.) The expected return of Stock B is 1.0 %. (Round to one decimal place.) The standard deviation of Stock A is (Round to five decimal places.) Monthly Returns Jan Feb Mar Apr May Jun Stock A 2% 5% -6% 3% -2% 4% Stock B 0% 3% 8% -1% 4% -2% Portfolio 1% 1% 1% 1% 1% 1% Print Done -X
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Consider the following six months of returns for two stocks and a portfolio of those two stocks:
(Click the icon to view the monthly returns.)
Note: The portfolio is composed of 50% of Stock A and 50% of Stock B.
a. What is the expected return and standard deviation of returns for each of the two stocks?
b. What is the expected return and standard deviation of returns for the portfolio?
c. Is the portfolio more or less risky than the two stocks? Why?
a. What is the expected return and standard deviation of returns for each of the two stocks?
The expected return of Stock A is 1.0 %. (Round to one decimal place.)
The expected return of Stock B is 1.0 %. (Round to one decimal place.)
The standard deviation of Stock A is
(Round to five decimal places.)
Monthly Returns
Jan
Feb
Mar
Apr
May
Jun
Stock A
2%
5%
-6%
3%
-2%
4%
Stock B
0%
3%
8%
-1%
4%
-2%
Portfolio
1%
1%
1%
1%
1%
1%
Print
Done
-X
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