solution
- You observe returns on stocks A and B on three dates:
|
Returns |
||
|
Date |
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Stock B |
|
1 |
3% |
4% |
|
2 |
4% |
6% |
|
3 |
1% |
3% |
What is the standard deviation of the
individual stock returns? What is the covariance? What
is the correlation?
(You may use Excel commands to answer
these questions and write down your answers instead of calculating
the answers by hand.)
You form a portfolio that is 30% invested in stock A and 70%
invested in stock B. What are the portfolio returns on dates 1, 2,
and 3? What is the mean return and the return standard
deviation of your portfolio?
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