Here are the returns on two stocks. Digital Executive Cheese Fruit January +14 +8 February -4 +2 March +6 +5 April +8 +12 May -5 +3 June +4 +6 July -3 -4 August -9 Required: a-1. Calculate the variance and standard deviation of each stock. a-2. Which stock is riskier if held on its own? b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. c. Is the variance more or less than halfway between the variance of the two individual stocks?
Here are the returns on two stocks. Digital Executive Cheese Fruit January +14 +8 February -4 +2 March +6 +5 April +8 +12 May -5 +3 June +4 +6 July -3 -4 August -9 Required: a-1. Calculate the variance and standard deviation of each stock. a-2. Which stock is riskier if held on its own? b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. c. Is the variance more or less than halfway 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
Problem 1PS
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Transcribed Image Text:Here are the returns on two stocks.
Digital
Executive
Cheese
Fruit
January
+14
+8
February
-4
+2
March
+6
+5
April
+8
+12
May
-5
+3
June
+4
ok
+6
July
August
-3
-9
-3
ent
Required:
ences
a-1. Calculate the variance and standard deviation of each stock.
a-2. Which stock is riskier if held on its own?
b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks.
c. Is the variance more or less than halfway between the variance of the two individual stocks?
Complete this question by entering your answers in the tabs below.
Req A
Req A2
Req B
Req C
Calculate the variance and standard deviation of each stock.
Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
Variance
Digital Cheese
Retum
%
Executive Fruit
Return
%
Standard deviation
< Req A1
Req A2 >
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