Given the following returns for Stock X and stock Y Stock X % return   Stock Y % return 2   1 4   3 6   5 8   6 12   9   Calculate the variance, and standard deviation of each stock return, assume the above is a sample (i.e. divide by n-1 instead of n). Interpret the results for x only. Calculate the covariance, and correlation coefficient between both stocks Assume a portfolio made of both stocks (60% in stock X and 40% in stock Y) calculate the expected return and standard deviation of the portfolio.

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
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Given the following returns for Stock X and stock Y

Stock X % return

 

Stock Y % return

2

 

1

4

 

3

6

 

5

8

 

6

12

 

9

 

  1. Calculate the variance, and standard deviation of each stock return, assume the above is a sample (i.e. divide by n-1 instead of n). Interpret the results for x only.
  2. Calculate the covariance, and correlation coefficient between both stocks
  3. Assume a portfolio made of both stocks (60% in stock X and 40% in stock Y) calculate the expected return and standard deviation of the portfolio.

 

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