Here are the returns on two stocks. Digital Cheese Executive Fruit January +14 +8 February -4 +2 March +6 + 5 April +8 +12 May -5 +3 June +4 +6 July -3 -4 August -9 -3 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?
Here are the returns on two stocks. Digital Cheese Executive Fruit January +14 +8 February -4 +2 March +6 + 5 April +8 +12 May -5 +3 June +4 +6 July -3 -4 August -9 -3 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?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter6: Risk And Return
Section: Chapter Questions
Problem 4P: An analyst gathered daily stock returns for Feburary 1 through March 31, calculated the Fama-French...
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