Using the data in the following table,, consider a portfolio that maintains a 50% weight on stock A and a 50% weight on stock Ba. What is the return each year of this portfolio?b. Based on your results from part (a), compute the average return and volatility of the portfolio.c. Show that (i) the average return of the portfolio is equal to the (weighted) average of the average returns of the two stocks, and (ii) the volatility of the portfolioequals the same result as from the calculation in Eq. 11.8.d. Explain why the portfolio has a lower volatility than the average volatility of the two stocks.a. What is the return each year of this portfolio?Enter the return of this portfolio for each year in the table below (Round to two decimal places.)YearPortfolioData table2010%2011%2012%2013%(Click on the following icon in order to copy its contents into a spreadsheet.)20142015%11%Year201020112012201320142015Stock A-10%20%5%5%2%9%Stock B21%7%30%-3%8%25%PrintDone☑

Answered: Using the data in the following table,,…

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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. Consider the following 6 months of returns for 2 stocks and a portfolio of those 2 stocks: Note: The portfolio is composed of 50% of Stock A and 50% of Stock B. a. What is the expected return and standard deviation of returns for each of the two stocks? b. What is the expected return and standard deviation of returns for the portfolio? c. Is the portfolio more or less risky than the two stocks? Why? a. What is the expected return and standard deviation of returns for each of the two stocks? The expected return of Stock A is ☐ %. (Round to one decimal place.) Data table ... (Click on the following icon ☐ in order to copy its contents into a spreadsheet.) Jan Feb Mar Apr May Stock A 2% 5% - 6% 3% - 2% Jun 4% Stock B - 1% -4% 7% - 2% 3% - 3% Portfolio 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% Print Done - ☑
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