a)
To determine: The returns of each year from the portfolio.
Introduction:
Portfolio refers to a set of financial investments owned by an investor. The portfolio of investments includes debentures, stocks, bonds, and mutual funds.
Return is a loss or gain incurred on the investment made by the investors. It is expressed in terms of percentage.
b)
To determine: The average return and volatility of the portfolio.
Introduction:
Average return of a particular investment is the average of the realized returns for each period.
c.
i)
To discuss: The average return of the portfolio is equivalent to the mean of the average returns of both stocks in the portfolio.
ii)
To determine: The portfolio’s volatility is equal to the same result of variance of the portfolio.
Introduction:
Stock is a type of security in a company that denotes ownership. A company can raise the capital by issuing stocks.
To discuss: The reason why the portfolio has a lower volatility compared to the average volatility of both stocks.
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