Here are the percentage returns on two stocks. Digital Executive Fruit Cheese 178 Month January February March April May June July August 5 14 2 a-1. Calculate the monthly variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 1 decimal places.) a-2. Which stock is the riskier if held on its own? b. Now calculate the variance and standard deviation of the returns on a portfolio that invests an equal amount each month in the two stocks. (Do not round intermediate calculations. Round your answers to 1 decimal places.) c. Is the variance more or less than half way between the variance of the two individual stocks?

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
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A 252.

Here are the percentage returns on two stocks.
Digital
Cheese
Month
January
February
March
April
May
June
July
August
17%
-3
5
Executive
Fruit
5
14
2
5
-4
a-1. Calculate the monthly variance and standard deviation of each stock. (Do not round intermediate calculations. Round your
answers to 1 decimal places.)
a-2. Which stock is the riskier if held on its own?
b. Now calculate the variance and standard deviation of the returns on a portfolio that invests an equal amount each month in the two
stocks. (Do not round intermediate calculations. Round your answers to 1 decimal places.)
c. Is the variance more or less than half way between the variance of the two individual stocks?
Transcribed Image Text:Here are the percentage returns on two stocks. Digital Cheese Month January February March April May June July August 17% -3 5 Executive Fruit 5 14 2 5 -4 a-1. Calculate the monthly variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 1 decimal places.) a-2. Which stock is the riskier if held on its own? b. Now calculate the variance and standard deviation of the returns on a portfolio that invests an equal amount each month in the two stocks. (Do not round intermediate calculations. Round your answers to 1 decimal places.) c. Is the variance more or less than half way between the variance of the two individual stocks?
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