Seagull Company and Swan Company are both service compa- nies. Their stock returns for the past three years were: Seagull: -5%, 15%, 20%; Swan: 8%, 8%, 20%. i) Calculate the mean return and variance for each company. ii) Calculate the covariance between the returns of the companies and the standard deviations of the returns to the companies. iii) Calculate the correlation coefficient between the returns of the two companies. iv) If Seagull and Swan are combined into a portfolio with 50% of the funds invested in each stock, calculate the expected return on the portfolio. v) What is the variance and standard deviation of such a portfolio (as described in part iv)?
Seagull Company and Swan Company are both service compa- nies. Their stock returns for the past three years were: Seagull: -5%, 15%, 20%; Swan: 8%, 8%, 20%. i) Calculate the mean return and variance for each company. ii) Calculate the covariance between the returns of the companies and the standard deviations of the returns to the companies. iii) Calculate the correlation coefficient between the returns of the two companies. iv) If Seagull and Swan are combined into a portfolio with 50% of the funds invested in each stock, calculate the expected return on the portfolio. v) What is the variance and standard deviation of such a portfolio (as described in part iv)?
MATLAB: An Introduction with Applications
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ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
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please just solve iv) and v), thank you.
Transcribed Image Text:Seagull Company and Swan Company are both service compa-
nies. Their stock returns for the past three years were: Seagull:
-5%, 15%, 20%; Swan: 8%, 8%, 20%.
i) Calculate the mean return and variance for each company.
ii) Calculate the covariance between the returns of the companies
and the standard deviations of the returns to the companies.
iii) Calculate the correlation coefficient between the returns of
the two companies.
iv) If Seagull and Swan are combined into a portfolio with 50%
of the funds invested in each stock, calculate the expected return
on the portfolio.
v) What is the variance and standard deviation of such a portfolio
(as described in part iv)?
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