Here are the returns on two stocks.

Digital Cheese Executive Fruit

January 13 6

February -2 1

March 4 4

April 6 14

May -3 2

June 2 5

July -1 -2

August -7 -1

a-1. Calculate the variance and standard deviation of each stock. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Digital Cheese Return Executive Fruit Return

Variance ______% ________%

Standard Deviation ______% ________%

a-2. Which stock is the riskier if held on its own?

• Digital Cheese
• Executive Fruit

b. Now calculate the returns in each month of a portfolio that invests an equal amount each month in the two stocks. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 2 decimal places.)

Month Portfolio Return

January ______

February _____

March _____

April ______

May _____

June ______

July _____

August ______

c. Is the standard deviation more or less than half way between the variance of the two individual stocks?

• Less
• More