Below is annual stock return data on Hollenbeck Corp and Luzzi Edit, Inc.
a. What is the average return, variance, and standard deviation for each stock?
b. What is the expected portfolio return on a portfolio comprised of
i. 25% Hollenbeck Corp and 75% Luzzi Edit?
ii. 50% Hollenbeck Corp and 50% Luzzi Edit?
iii. 5% Hollenbeck Corp and 25% Luzzi Edit?
c. Without doing any calculations, would you expect the correlation between the returns on Hollenbeck Corp and Luzzi Edit's stock to be positive, negative, or zero? Why?

  • CreatedMarch 27, 2015
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