a.

What are the average monthly returns for each stock above? (2 marks)

b.

What are the standard deviation of the returns of Stock X and Stock Y? (2 marks)

c.

What is the correlation between Stock X and Stock Y? (2 marks)

d.

If an investor has a portfolio weighted 55% in Stock X and 45% in Stock Y, what is the expected return of the portfolio? Assume the average monthly returns above reflect the expected return of each stock. (2 marks)

e.

What is the standard deviation on the portfolio identified in d? (2 marks)

f.

If the correlation co-efficient between the two stocks was -1, what weighting of each stock would you need to have in your portfolio to have a portfolio standard deviation of 0? (2 marks)

g.	If you had $100,000 to invest in either or both of these stocks, how much of each would you invest in? and why? Incorporate expected return, risk and diversification into your answer. (4 marks)

Please do not use column A as I would like to use it to record my marking. Here are the monthly closing prices for Stock X and Stock y for the last year. Note that if you see #value! In the cells below it means you havent entered your student number in the yellow cell on the Cover Tab. Month 2019-11-30 2019-12-31 2020-01-31 2020-02-29 2020-03-31 2020-04-30 2020-05-31 Stock X Closing Stock Y Closing Price Price $ 45.30 $ 21.09 45.11 22.55 39.07 18.78 37.04 14.42 41.12 16.00 40.97 17.37 40.31 16.16 39.85 18.28 39.14 16.52 37.64 14.32 33.42 18.78 34.18 19.67 2020-06-30 2020-07-31 2020-08-31 2020-09-30 2020-10-31 Please do not use column A as I would like to use it to record my marking. Here are the monthly closing prices for Stock X and Stock y for the last year. Note that if you see #value! In the cells below it means you havent entered your student number in the yellow cell on the Cover Tab. Month 2019-11-30 2019-12-31 2020-01-31 2020-02-29 2020-03-31 2020-04-30 2020-05-31 Stock X Closing Stock Y Closing Price Price $ 45.30 $ 21.09 45.11 22.55 39.07 18.78 37.04 14.42 41.12 16.00 40.97 17.37 40.31 16.16 39.85 18.28 39.14 16.52 37.64 14.32 33.42 18.78 34.18 19.67 2020-06-30 2020-07-31 2020-08-31 2020-09-30 2020-10-31