Consider the following returns: Calculate the variance on a portfolio that is made up of equal investments in Home Depot and IBM stock.

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Lowes Home Depot IBM Realized Realized Realized Year End Return Return Return 2000 20.1% -14.6% 0.2% 2001 72.7% 4.3% -3.2% 2002 -25.7% -58.1% -27.0% 2003 56.9% 71.1% 27.9% 2004 6.7% 17.3% -5.1% 2005 17.9% 0.9% -11.3% Lowes Home Depot IBM Realized Realized Realized Year End Return Return Return 2000 20.1% -14.6% 0.2% 2001 72.7% 4.3% -3.2% 2002 -25.7% -58.1% -27.0% 2003 56.9% 71.1% 27.9% 2004 6.7% 17.3% -5.1% 2005 17.9% 0.9% -11.3%

Answer rating: 100% (QA)

Calculate the portfolio returns for each year Year 2000 201 146 2 275 Year 2001 727 43 2 385 Year 20... View the full answer