a) Suppose we form a portfolio invested in Toyota and Ford stocks. Cells B3:C5 in the...

 

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a) Suppose we form a portfolio invested in Toyota and Ford stocks. Cells B3:C5 in the spreadsheet below display the mean return, variance, and standard deviation of the Toyota and Ford returns, respectively. Cell B6 reports the covariance between the two assets, whereas Cell B9 indicates the portfolio weight of Toyota: A B C 1 2 Asset returns 3 Mean return 4 Variance 5 6 7 8 9 Proportion of Toyota 10 Standard deviation Covariance 11 12 Portfolio mean return 13 Portfolio return variance 14 Portfolio return standard deviation 15 Toyota 2.23% 0.0133 ? 0.0019 ? ? 0.4 Ford -0.42% 0.0201 ? D i) Compute the standard deviation of Toyota (Cell BS) and Ford (Cell C5) to two decimal places and interpret the result. Show your calculations in detail, including the theoretical as well as the excel formula. [5 marks] ii) Compute the mean and variance of this portfolio, as well as its standard deviation (Cells B12:B14). Show your calculations in detail, including the theoretical as well as the excel formula. [15 marks] a) Suppose we form a portfolio invested in Toyota and Ford stocks. Cells B3:C5 in the spreadsheet below display the mean return, variance, and standard deviation of the Toyota and Ford returns, respectively. Cell B6 reports the covariance between the two assets, whereas Cell B9 indicates the portfolio weight of Toyota: A B C 1 2 Asset returns 3 Mean return 4 Variance 5 6 7 8 9 Proportion of Toyota 10 Standard deviation Covariance 11 12 Portfolio mean return 13 Portfolio return variance 14 Portfolio return standard deviation 15 Toyota 2.23% 0.0133 ? 0.0019 ? ? 0.4 Ford -0.42% 0.0201 ? D i) Compute the standard deviation of Toyota (Cell BS) and Ford (Cell C5) to two decimal places and interpret the result. Show your calculations in detail, including the theoretical as well as the excel formula. [5 marks] ii) Compute the mean and variance of this portfolio, as well as its standard deviation (Cells B12:B14). Show your calculations in detail, including the theoretical as well as the excel formula. [15 marks]

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The image shows a spreadsheet with data related to the mean return variance and covariance of assets from Toyota and Ford which are presumably stocks ... View the full answer