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Here are the returns on two stocks. Digital Executive Cheese Fruit January +19 +9 February -2 +1 March +4 +4 April +6 +13 May -3 +1 June +3 +5 July -1 -2 August -7 -1

Here are the returns on two stocks. Digital Executive Cheese Fruit January +19 +9 February -2 +1 March +4 +4 April +6 +13 May -3 +1 June +3 +5 July -1 -2 August -7 -1

Essentials Of Investments
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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Here are the returns on two stocks. Digital Executive Cheese Fruit January +19 +9 February -2 +1 March +4 +4 April +6 +13 May -3 +1 June +3 +5 July -1 -2 August -1 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?
Transcribed Image Text:Here are the returns on two stocks. Digital Executive Cheese Fruit January +19 +9 February -2 +1 March +4 +4 April +6 +13 May -3 +1 June +3 +5 July -1 -2 August -1 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?
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