Question: 19. Diversification. Here are the returns on two stocks. (LO11-3) January February March April May June July August Digital Cheese Executive Fruit +7 +15

19. Diversification. Here are the returns on two stocks. (LO11-3) January February March April May June July August Digital Cheese Executive Fruit +7 +15 +1 -3 +4 +5 +13 +7 +2 -4 +5 +3 -3 -2 -2 -8 a. Calculate the variance and standard deviation of each stock. 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?

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