Deep Water Financial of Duluth, Minnesota, has asked you to evaluate the stock price growth for a portfolio
containing the following firms: General Motors, International Business Machines, Potlatch, Inc., Sea Containers, Ltd., and Tata Communications. Compute the means, variances, and covariance’s for the stocks.
Using the data file Stock Price File, compute the mean and variance for a portfolio
that represents the five stocks
equally. Second, modify the portfolio
by removing Potlatch and Sea Containers and including in the portfolio
40% General Motors, 30% International Business Machines, and 30% Tata Communications. Determine the mean and variance for the second portfolio
and compare it with the first.