Chapter 5 b) Find the standard deviation for Stock AM c) Find the covariance between Stock AM and Stock BD. Merissa is evaluating her portfolio performances. She currently has two stock (Stock BD and Stock CL) in her portfolio which she acquired 6 months ago. She notices that the d) Find the correlation coefficient between Stock AM and Stock BD correlation coefficient of her portfolio are almost perfectly positive thus she is considering to remove Stock CL from her portfolio. Furthermore, stock CL is continuously having a e) Based on your answer in d), should Cobie combine Stock AM and BD in her portfolio? drop in its value. The potential replacement is Stock AM. Explain your answer without calculation. Cobie downloaded the last five days' data of Stock AM to help in her decision. f) Based on your previous answer, calculate Cobie's portfolio return on 6th July by assum- ing: Date Stock AM (in RM) Open Close i) The price of Stock AM, BD and CL on 6th of July is $6, $7 and $3 respectively. 1/7/2020 2.20 2.50 fi) Merissa can only purchase stock AM by using the proceeds of selling stock CI 2/7/2020 2.50 3.00 iii) Merissa can only afford to have two stocks in her portfolio simultaneously. 3/7/2020 3.00 4.20 4/7/2020 4.20 3.78 5/7/2020 3.78 5.67 g) Calculate the portfolio risk for the selected stock pairing She also observes that her current portfolio is having the following information: h) If Merissa intends to hold the new portfolio for a year time, calculate her HPR after a year, Date Rates of return (r ) (in %) assuming: Stock BD Stock CL 1/7/2020 i) The price of Stock AM, BD and CL in a year time will be $10, $5 and $4 respectively 2/7/2020 10 -20 ii) During the one-year period, Stock AM paid $1 dividend for every unit while stock 3/7/2020 15 -10 BD paid $0.50 dividends per share during the same time period. Stock CL did not 4/7/2020 20 5/7/2020 15 -5 pay any dividend. Number of units owned |10,000 10,000 Given all the above information, a) Find the average return for Stock AM